The U.S. employment increased again by a higher rate than many had anticipated during December: according to the recent U.S. employment report, which was published today, January 4th by the Bureau of Labor Statistics the number of non-farm employees grew by 155,000. The main sectors that grew during December were in professional and business services, and health care.
The rate of unemployment edged up to 7.8%. Gold and Silver prices are currently falling along with other commodities prices.
The chart below presents the revised figures of the number of non-farm employees grew in the labor market during recent years (up to December 2012). The change in non-farm payroll was revised down for October from +138k to +137k; For November it was revised from +146k to +161k. The revised up figures for November 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 around 107k. This means that the recent increase in employment was higher than this threshold.
The rate of U.S. unemployment edged up in December to 7.8%. The rate of unemployment is still at its lowest since mid-2008. The current unemployment rate is 0.7 percent points lower than its rate in November 2010.
Furthermore, the number of unemployed persons (12.2 million) remained virtually unchanged in December compared to the previous month.
Following this news currently, the Euro/USD exchange rate is slightly rising; crude oil price is slightly falling while the U.S stock market indexes are slightly increasing; gold price is falling.
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 fall; this correlation was mostly due to the effect this news has had on the speculation of the Fed intervening again the U.S financial.
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. 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. Moreover, the recent publication of the FOMC minutes may have been a strong contributing factor for the recent fall in gold and silver prices.
Crude Oil Market
The recent increase in the non-farm employment is higher than many had anticipated; 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 were revised up. This could suggest the price of oil might rise.
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