The U.S. economy added 228,000 jobs in November. What does it mean for the gold market?

November Payrolls Beat Expectations

Total nonfarm payroll employment increased 228,000 in November. The rise followed an increase of 244,000 in September (after a downward revision), according to the U.S. Bureau of Labor Statistics. Hence, there was a small slowdown. However, the headline number surprised positively, as the markets expected only 190,000 job gains in the previous month. Thus, the report is positive news for the U.S. labor market and negative for the gold market. Moreover, employment gains in September and October combined were 3,000 higher than previously reported. It means that job gains in the last three months have averaged 170,000, more than what is needed to keep up with the growth of population. The employment gains were widespread again, but the biggest employers were education and health services (+54,000), and professional and business services (+46,000).

When it comes to the medium term, the annual job growth rate remains in a downward trend. However, since disappointing September, the annual job growth rate rebounded, as the chart below shows.

Chart 1: Total nonfarm payrolls (change, thousands of persons) over the last five years.

Other Labor Market Indicators

Other labor market indicators were mixed. The unemployment rate was unchanged at 4.1 percent. Similarly, the labor force participation rate remained at 62.7. Meanwhile, the employment-population rate declined from 60.2 percent to 60.1 percent. It means that the U.S. economy added jobs, but neither unemployment rate, nor the labor force participation rate changed. It’s a bit strange. On the other hand, the average hourly earnings for all employees on private nonfarm payrolls rose by 5 cents. It means that the annual wage inflation was 2.5 percent. Historically speaking, the wage inflation is still subdued.

Payrolls, Fed and Gold

The November U.S. nonfarm payrolls were better than expected. The report points generally to a tight labor market and to strong year-end momentum for the economy. Although the strong job growth lifted the U.S. dollar and stock markets, the price of gold did not plunge. Actually, it ended a trading session with a small gain, as the chart below shows.