According to the latest Bureau of Labor Statistics monthly report, total U.S. employment grew as many had anticipated: Based on the ADP update, private non-farm payroll rose by 139k during February: In the last U.S. employment report, which was published today, March 7th, the total number of non-farm employees grew by 175,000. The main sectors that grew during February were in professional and business services and in wholesale trade but declined in information. The rate of unemployment, however, inched up to 6.7%. The growth in employment was higher than the natural growth of workforce. Due to the rise in employment, the markets reaction to the employment numbers was enough to drag down the prices of gold and silver. Other commodities prices and the major stock markets rally.
The chart below presents the revised figures of the added number of non-farm employees in the labor market in recent years (up to February 2014). The non-farm payroll was little changed up for January from +75k to +84k. For December, the employment was revised up from +113k to +129k. The combined added jobs in those months were 213k – roughly 25k more jobs than previously estimated. The revised figures for December and January suggest the employment situation in the U.S was closer to the numbers previously estimated.
As I have presented in the past, the minimum number of non-farm payroll employment needed to maintain the employment unchanged (to compensate with the growth of the U.S. civilian work force) – is roughly more than 100k. So the recent increase in number of jobs was higher than this threshold.
In February, the rate of U.S. unemployment inched up to 6.7%. The rate of unemployment is at its lowest since mid-2008. The current unemployment rate is 1 percent points lower than its rate in February 2012.
Further, the number of unemployed persons (10.5 million) grew in February compared to the previous month. A closer look reveals that the number of unemployment rose by 223k, and the civilian labor force rose by 264k. This could suggest that the modest gain in unemployment was inline with the higher number of people participating in the labor force. After all, the participation rate remained unchanged at 63%.
Following this news, the USD/Yen exchange rate slightly increased; crude oil price also rallied; the U.S stock market indexes are also recovered; gold and silver prices are currently trading down.
As I have already stated in the last gold and silver monthly outlook, historically, if the non-farm payrolls rise by more than the population growth rate (roughly 100k), gold and silver prices tended to fall. Moreover, if the number of employees rises by a higher pace than expected, this could also drag down the prices of gold and silver.
The table below shows the correlation between the news of the U.S. non-farm payroll employment changes and the daily shifts in gold and silver prices on the day of the U.S. labor report publication.