The U.S. employment rose by a lower than many had anticipated – based on ADP estimate, the non-farm payroll rose by 158k during March: According to the recent U.S. employment report, which was published today, April 5th by the Bureau of Labor Statistics the number of non-farm employees rose by 88,000. The main sectors that grew during March were in professional and business services, and health care but declined in retail trade.
The rate of unemployment inched down to 7.6%. Gold and Silver prices are currently rising while other commodities prices and the major stock markets are falling.
The chart below shows the revised figures of the number of non-farm employees expanded in the labor market during recent years (up to March 2013). The change in non-farm payroll was revised up for January from +119k to +148k; For February it was revised from +236k to +268k. The revised figures for January and February suggest the employment situation in the U.S has improved in the previous months.
As I have analyzed in the past, the minimum number of non-farm payroll employment needed to maintain the rate of unemployment unchanged (to compensate with the growth of the U.S. civilian work force) is around 107k. So the recent gain in employment was lower than this threshold.
The rate of U.S. unemployment inched down in March to 7.6%. The rate of unemployment is at its lowest since mid-2008 but hasn’t changed much since November 2012. The current unemployment rate is 0.6 percent points lower than its rate in March 2012.
Furthermore, the number of unemployed persons (11.7 million) also slightly fell in March compared to the recent month.
Following this news, currently, the Euro/USD exchange rate is rising; crude oil price is falling; the U.S stock market indexes are also falling; gold price is rising.
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 pointed out in the latest gold and silver prices monthly outlook, historically, if the non-farm payrolls rise by less than the population growth rate (roughly 107k), gold price tended to rise; 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 shifts 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 shifts of bullion prices.
Crude Oil Market
The recent moderate rise in the non-farm employment is lower than many had anticipated; moreover, the employment grew by well below the 110k mark, which is a negative sign for the progress of the U.S. economy from the perspective of the U.S’s work force. This could suggest the price of oil may further decline.
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