The U.S. employment rose again by lower than many had anticipated – according to ADP the non-farm payroll rose by 192k – during January: according to the latest U.S. employment report, which was published today, February 1st by the Bureau of Labor Statistics the number of non-farm employees rose by 157,000. The main sectors that grew during January were in Retail trade, construction, health care, and wholesale trade.
The rate of unemployment remained at 7.9%. Gold and Silver prices are currently rising along with other commodities prices.
The chart below shows the revised figures of the number of non-farm employees grew in the labor market during recent years (up to January 2013). The change in non-farm payroll was revised up for November from +161k to +247k; For December it was revised from +155k to +196k. The revised up figures for November and December suggest the employment situation in the U.S has improved in the past couple of months more than it was claimed earlier.
As I have examined in the past, the number of non-farm payroll employment needed to be added to the U.S labor market on an average monthly rate to keep with the growth of the U.S. civilian work force at around 107k. This means that the recent rise in employment was higher than this threshold.
The rate of U.S. unemployment edged up in January to 7.9%. The rate of unemployment is still at its lowest since mid-2008 but hasn’t changed much since September 2012. The current unemployment rate is 0.4 percent points lower than its rate in January 2011.
Furthermore, the number of unemployed persons (12.3 million) was little changed in January compared to the previous month.
Following this news currently, the Euro/USD exchange rate is rising; crude oil price is slightly falling while the U.S stock market indexes are slightly increasing; gold price is also rising.
Now let’s breakdown how this news might affect the direction of commodities prices, including the prices of gold and crude oil:
As I have already pointed out in the recent gold and silver prices monthly outlook, historically, if the non-farm payrolls expand by at least the population growth rate (roughly 107k), gold price tended to decline; this correlation was mostly due to the effect this news has had on the speculation of the Fed intervening again the U.S financial and the progress of the U.S economy.
The table below presents 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. The table below presents the negative correlations between the U.S employment and daily changes of precious metals. This relation, however, should be taken with a grain of salt. This table doesn’t consider the market anticipation before the publication of the labor report. This time, the anticipation may have been for a higher gain in number of jobs. Moreover, the stagnation in the unemployment rate might also influence bullion traders.
Crude Oil Market
The recent rise in the non-farm employment is lower than many had anticipated; even though the employment grew by well above the 110k mark, which is a positive sign for the development of the U.S. economy from the perspective of the U.S’s work force. Moreover, the previous employment figures for November and December were revised up. This could suggest the price of oil might slightly rise.
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