The U.S. employment increased by higher than many had anticipated – based on ADP estimate, the non-farm payroll rose by 198k during February: according to the recent U.S. employment report, which was published today, March 8th by the Bureau of Labor Statistics the number of non-farm employees increased by 236,000. The main sectors that grew during February were in professional and business services, construction, and health care.
The rate of unemployment edged down to 7.7%. 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 February 2013). The change in non-farm payroll was revised up for December from +196k to +219k; For January it was revised from +157k to +119k. The revised figures for December and January suggest the employment situation in the U.S has slightly improved.
As I have analyzed 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 maintain with the growth of the U.S. civilian work force at around 107k. So that the recent gain in employment was higher than this threshold.
The rate of U.S. unemployment edged down in February to 7.7%. 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 0.6 percent points lower than its rate in February 2012.
Furthermore, the number of unemployed persons (12.0 million) also edged down in February compared to the previous month.
Following this news currently, the Euro/USD exchange rate is tumbling down; crude oil price is slightly falling while the U.S stock market indexes are slightly increasing; gold price is also falling.
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 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 and the progress of the U.S economy.
The table below shows the correlation between the news of the U.S. non-farm payroll employment developments 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 bullion rates.
Crude Oil Market
The recent rally in the non-farm employment is higher than many had anticipated; moreover, the employment grew by well above the 110k mark, which is a positive 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 might slightly increase.
For further reading:
- Gold and Silver Outlook for March 4-8
- Weekly Outlook of Financial Markets for March 4-8
- Gold and Silver Outlook for March
- U.S Employment Increased by 157k in January | Gold & Silver Rising