The U.S. labor force continued to grow in October after it had grown in September: according to the recent U.S. employment report, which was published today, November 4th by the Bureau of Labor Statistics the number of non-farm employees inclined by 80,000. The increase in employment was mainly in the private sector, while government continued to trend down. The main sectors that inclined during October were in business services, leisure and hospitality, health care and mining.
Due to the growth in employment the rate of U.S. unemployment was little changed and slipped by 0.1 percent point from 9.1% to 9.0% (as seen in the chart below). The rate of unemployment remained around the 9.0 and 9.2 range since April 2011.
Furthermore, the number of unemployed persons (13.9 million) slightly slipped in October.
As I have calculated in the past post, the average number of jobs needed to be created on a monthly scale to ward off the increase in rate of unemployment due to growth of the U.S. civilian labor force is at least 107,000 (see green line in the first chart above). This means that the increase in employment during October almost reaches this figure of containing the current employment with respect to the labor force natural growth.
Following this news currently, the Euro to US dollar exchange rate is traded down along with the AUD/USD, while crude oil prices and gold price are falling. This might have more to do with the news from Europe and the speculation revolving the future role of Greece in the European Union.
Now let’s breakdown how this news could affect the commodities markets, including gold and crude oil:
Gold Market
As analyzed in the recent gold price daily forecast, historically, as the non-farm payrolls incline gold price tend to decrease; this correlation was mostly due to the effect this news had on the US dollar; the news of the changes in the U.S. labor force during October could consequently reverse the recent rally of gold price.
The table below shows the correlation between the news of the U.S. labor report and the daily changes in gold and silver prices (the complete analysis can be found in the gold and silver prices daily outlook for November 4th).
Crude Oil Market
This report shows the U.S. economy slightly grew from its labor force point of view and provides some light optimism; this might reflect that the U.S. economy isn’t entering a deep recession as some have speculated in the past, but also isn’t out of the woods just yet; therefore this news may also reflect an expected growth in U.S. demand for crude oil, and consequently may drive crude oil prices up.
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