(Kitco News) – The gold market is holding solid gains Wednesday as the U.S. labor market appears to be losing momentum as the private sector higher fewer workers than expected in January, according to private-sector payrolls processor ADP.
ADP said that 107,000 jobs were created in the first month of 2024. The report missed expectations at consensus forecasts called for job gains of 148,000.
The gold market is not seeing much reaction to the latest employment data. April gold futures last traded at $2,056 an ounce, up 0.26% on the day.
Along with disappointing headline employment growth, the report also noted further easing in wage pressures, helping to keep inflation in check.
“Progress on inflation has brightened the economic picture despite a slowdown in hiring and pay,” said Nela Richardson, chief economist, ADP, in the report. “Wages adjusted for inflation have improved over the past six months, and the economy looks like it’s headed toward a soft landing in the U.S. and globally.”
The report said that annual wage for workers who stayed in their jobs increased 5.2%; at the same time, workers who switched jobs saw wages increase 7.2%, “the smallest annual gain since May 2021.”
Although job creation last month was slower than expected, the report did not highlight any significant job losses, which some economists have said shows some underlying strength in the labor market.
In a sector-by-sector breakdown, the report said that that the goods-producing industries created 30,000 jobs. The natural resources/mining sector created 6,000 jobs last month, 22,000 new positions were created in the construction sector and the manufacturing sector created 2,000 jobs.
Meanwhile, the service-providing industries created 77,000 jobs. Trades, transportation and utilities created 23,000 jobs in January; the information sector lost 9,000 jobs, last month; financial activities created 7,000 positions; professional and business services created 2,000 jobs; 17,000 new positions were created in the education and healthcare sectors; the hospitality and leisure created 28,000 jobs and 9,000 jobs were created in other services.
Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA, warned investors that the ADP employment report is not going to have much impact on interest rate expectations ahead of the Federal Reserve’s monetary policy meeting later this afternoon.
“I don’t think it changes anything for a couple of reasons. The most obvious is that it’s been a terrible indicator for the official payroll number so, barring an enormous miss, it should probably be ignored. The other is that employment is no longer as important to the Fed achieving its inflation goal, wages are the more important element of the jobs report,” he said in a note.
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