The knee-jerk was a pop in gold above $1250. Silver jumped to $14.64, and the dollar dropped. Here’s a look at the report and market’s reaction…
The Employment Situation Report, also known as the Nonfarm Payrolls Report, or the Jobs Report, was just released for November.
Prior to the release of the report, here is what the expectations looked like from Econoday:
Here are the actual numbers as reported by the BLS:
Number of jobs created in the month of November: 155,000
Unemployment rate unchanged at: 3.7%
Average hourly earnings (year over year) rise: 3.1%
Labor force participation rate unchanged at: 62.9%
Here’s Bloomberg’s take on the print:
U.S. payrolls and wages rose by less than forecast in November while the unemployment rate held at the lowest in almost five decades, indicating some moderation in a still-healthy labor market.
Nonfarm payrolls increased by 155,000 after a downwardly revised 237,000 gain in the prior month, a Labor Department report showed Friday. The median estimate in a Bloomberg survey called for an increase of 198,000. Average hourly earnings rose 0.2 percent from the prior month, compared with forecasts for 0.3 percent, though wages matched projections on an annual basis, up 3.1 percent for a second month.
The report adds to signs that economic growth is cooling a bit, following weakness in business-equipment orders and an ebbing of consumer optimism. While the data may spur more concern over the outlook after stocks and bond yields tumbled this week, some investors may see the prospect of a slower pace of Federal Reserve interest-rate increases as a positive following an expected hike this month.
The knee-jerk reaction sent gold over $1250:
Knee jerk reaction to both the FOMC statements and the Jobs Report are often not the actual direction of the move. I did say earlier in the week, however, that I was not looking for a smash in the metals today, so we’ll have to see how the move ultimately plays out.
You have to go back to July 11th for the last time gold was at $1250:
Some charts and coverage, courtesy of ZH:
With whispers that the November jobs report would disappoint to various factors such as winter storms and rising jobless claims, moments ago the BLS reported that November payrolls indeed disappointed expectations, printing at 155K, below the 198K expectations, with the October number revised lower from 250K to 237K.
However, confirming that this number too was weather affected, the BLS reported that “workers unable to work due to bad weather” came at a substantial 129K, well above prior November months (2017 was 84K, 2016 was 19K, 2015 was 97K).
And while hourly earnings rose at a hottish 3.1% year over year, and as consensus expected, on a monthly basis, the increase was 0.2%, below the 0.3% expected, and potentially adding fuel to any dovish reversal by the Fed.
So while both the headline jobs print and wages came in weaker than expected, a big reason for this was weather. The question, however, is whether the market will focus on the one-time factors impacting the November print, or whether it will instead see this as “bad data” which will then be interpreted as good news for stocks, as it means a Fed pause is even more likely.
Fifteen minutes in, and the knee-jerks have reversed, but have not settled on a direction:
This will be considered a weak report.
With labor force participation and the unemployment rate unchanged, but only 155,000 jobs created and coming in under expectations, plus last month’s number downwardly revised, that should be enough to offset the 3.1% wage growth year over year to consider this month’s data as weak.
The question is how weak?
Because the analysts will be speculating whether the number is weak enough to warrant a pause in the Fed Funds Rate increases. Now, on it’s own, it is unlikely, but, as we know the Fed is becoming more “data dependent”, well, there is a bunch of economic data hitting the tape next week, the last week before the December FOMC, so I would look at this report as one of several factors the Fed will be looked at leading up to the two day Fed meeting on December 18th and 19th.
Granted, it’s all Kabuki Theater.
A Dog and Pony Show.
The Fed can raise or cut rates any time it wants, but alas, the MSM propagandists and Fed apologists have to build the Fed up as if they were a legitimate and needed organization.
The last time I checked, the Fed’s publicly stated goal is to kill the US dollar at a rate of 2.0% per year.
But I digress. Now we have to hear the “will they or won’t they hike” crap for another week and a half.
Thirty minutes in and it’s looking good for the home team:
The markets don’t even officially open for another twenty-some minutes.
Can gold take out $1250 today?
Can silver take out $14.75?
Or is this just another break-out fake-out?
We’re about to find out.
– Half Dollar
About the Author
U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.