In the recent Bureau of Labor Statistics monthly update, total U.S. employment increased 288K – slightly above market expectations. The ADP report showed that private non-farm payroll grew by 281K during June. According to the recent U.S. employment report, the main sectors that grew during June were in professional and business services, retail trade, food services and drinking places, and health care. The rate of unemployment inched down to 6.1%. Gold and silver are trading down.
The chart below presents the revised figures of the added number of non-farm employees in the labor market in past years (up to June 2014). The non-farm payroll grew in May from +282K to +304 K. For April, the employment rose from +217K to 224K. The combined lost jobs in those months were 29K – roughly 36k more jobs than previously estimated. The revised figures for April and May suggest the employment situation in the U.S was revised up from its previous estimate.
As I have showed in the past, the minimum number of non-farm payroll employment needed to maintain the employment unchanged (to compensate with the growth of the U.S. civilian work force) – is roughly 100K. So the recent rise in number of jobs was much higher than this threshold. Moreover, the sharp rise in employment is another indication for the slowly recovery of the U.S labor market.
Further, the number of unemployed persons (9.5 million) fell by 325K in June compared to the previous month. A closer look reveals that the civilian labor force also rose by 192K. This could suggest that the drop in unemployment was inline with the rise in the number of people participating in the labor force. After all, the participation rate remained unchanged at 62.8%.
Following this news, the USD/Yen exchange rate rallied; crude oil price slipped; the U.S stock market indexes also continued to slowly rise; gold and silver prices dropped.
Historically, if the non-farm payrolls rise by a higher than the population growth rate (roughly 100K), gold and silver prices tend to decline. This relationship seems to hold on in today’s trading, as precious metals are trading down. Moreover, the recent speech Janet Yellen delivered at the IMF conference, in which she signaled a rate hike isn’t likely to occur anytime soon, may have also provided additional backwind for the recent fall in gold and silver prices.
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 priceson the day of the U.S. labor report publication.