The U.S. labor force didn’t rise as many had anticipated during March: according to the recent U.S. employment report, which was published today, April 6th by the Bureau of Labor Statistics the number of non-farm employees increased by 120,000. The main sectors that rose during March were in manufacturing, food services and drinking places, and health care.
The chart below shows the revised figures of the number of non-farm employees added to the labor market during 2011 and 2012 (up to March). It shows that the recent figure in March was the lowest since October 2011. This is also after during the previous three months the number of employees added was well above the 200k mark. As I have calculated in the past, the number of non-farm payroll employment needed to join the labor market on an average monthly scale to keep up with the growth of the U.S. civilian labor force is at least 107,000 (see red line in the chart below). This means that the increase in employment during March may have just compensated for the population growth.
Following the moderate rise in employment the rate of U.S. unemployment edged down by 0.1% point to 8.2%. The rate of unemployment is at its lowest level in over two years in the past couple of months as seen in the chart below. The current unemployment rate is 1.6 percent points lower than its rate in November 2010.
Furthermore, the number of unemployed persons (12.7 million) also slightly declined during March.
Today the major markets are closed in Europe and U.S on account of Good Friday. This means the markets’ reaction to this news will have to be postponed to next week.
Now let’s breakdown how this news might affect the direction of commodities prices, including the prices of gold and crude oil:
Gold Market
As I have already reviewed in the April gold price monthly report, historically, as the non-farm payrolls rose gold price tended to decline; this correlation was mostly due to the effect this news had on the U.S dollar; the news of the moderate increase in the U.S. labor force during March could go both ways as it only shows a slight increase in employment so that it may have a moderate effect on gold price.
The table below shows the correlation between the news of the U.S. non-farm payroll employment changes and the daily changes in gold and silver prices on the day of the U.S. labor report publication.
Crude Oil Market
The growth in the non-farm employment is another positive signal for the progress of the U.S. economy in regards to its work force (even though the growth wasn’t big this month compared with the growth in employment in the previous months; thus this news may also reflect an expected growth in U.S. demand for crude oil, and consequently may positively affect crude oil prices during today’s trading.
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