U.S. NF Payroll Bounces Back with a Gain of 223K in April | Gold Still Rallied

Following the disappointing March NFP report, this time the U.S. non farm payroll grew by 223K in April – inline with market expectations. The ADP report presented a gain of only 169K jobs and the market estimates were set at 228K, for April. According to the U.S. employment report, the main sectors that expanded their jobs were professional and business services, health care, and construction trade. The drop in jobs in, the mining sector continued. The rate of unemployment inched down to 5.4%. The U.S. dollar rallied against the Euro, but gold and silver bounced back.

 The chart below shows the revised figures of the added number of non-farm employees in the labor market in past years (up to April 2014). The non-farm payroll in March and February were revised down again by a total of 39K than previously reported. This revision comes after the March report initially showed a gain of 126K jobs.  So, the jobs report for March was even worse than previously estimated.

For now, the adverse impact of low oil prices on the energy sector was only partly offset by higher growth in other sectors. The potential positive impact of low oil prices on the job market could take a longer time.

U.S. Nonfarm payroll employment up to 2015  May 8

In April, the rate of U.S. unemployment inched down to 5.4%. This unemployment rate is 0.9 percent points below the rate recorded in April 2014.

Moreover, the number of unemployed persons (8.549 million) slightly fell by 26K in April compared to the preceding month. A closer look reveals that the civilian labor force grew by 186K. So there was a rise in number of people participating in the labor force but fall in the number of unemployed – this is a good trend for the labor market; the participation rate inched up to 62.8%.

Finally, wages also rallied again – the hourly earnings increased to $24.87 per hour – a 3 cents gain, month over month; wages are still 2.17% higher than the same month back in 2014. So despite the rise in jobs, wages remain low, which isn’t a good indication for the recovery of the U.S. economy.

Since the jobs report showed a job gain, which was inline with market expectations, showed a downward revision of previous months’ jobs reports, and didn’t present any strong gain in wages; this could be the factor for the lukewarm reaction in the markets.  The U.S. dollar inched up against the Yen, but strongly rose against the Euro; gold and silver bounced back; stocks rallied, while bond yields slightly fell.

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