U.S. NFP Beats Expectations Again with 255K Jobs – Gold and silver fall

The U.S. non-farm payroll beat, yet again, market expectations as 255K jobs in July: The ADP estimated a gain of 179K jobs and the market expect an increase of 180K. The growth in wages, was also higher than expected as wages increased by 8 cents, month over month. The main sectors that expanded were in professional and business services, health care, and financial activities. The rate of unemployment remained unchanged at 4.9%. The U.S. dollar rallied while gold and silver changed direction and declined. Let’s review this report:  

Despite the stagnation in the headline unemployment rate, the U6 unemployment measurement, a broader measure of unemployment, edged up to 9.7%. In terms of revisions, there was a total upward revision of 18K for June and May combined.

nfp and unemploy

Source: BLS

In July, the rate of U.S. unemployment was 0.4 percent points below the rate recorded in July 2015.

The number of unemployed persons (7.770 million) declined by 13K in July compared to the previous month. But the civilian labor force also increased by 407K. So there was a rise in number of people participating in the labor force and a modest drop in the number of unemployed. Therefore, the participation rate inched up to 62.8%.

Finally, wages rose in July compared to June – the hourly earnings reached $25.69 per hour — a gain of 8 cent or 0.3%, month over month –higher than expected (exp. were for 0.2% gain); wages grew at an annual rate of 2.6%, year on year – the same pace as in the previous month.

Final point

The labor market is still on course to recovery and is nearing full employment; the only thing needed to make this assessment more concrete is to see a faster pace of wage growth along with a steady drop in U6. In any case, this news is likely to put more pressure on the FOMC to consider raising rates in the coming months.

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