(Kitco News) – The gold market is holding relatively steady gains but could struggle as the U.S. labor market remains healthier than expected as the economy continues to create new private sector jobs, according to private-sector payrolls processor ADP.
Thursday, ADP said that 164,000 jobs were created in the final month of the year. The report beat expectations at consensus forecasts called for job gains of 120,000.
“Job gains rose for the fourth straight month, led by a healthy bump in leisure and hospitality hiring. Construction held strong in the face of high interest rates, but manufacturing continued to struggle, notching another month of losses,” the report said.
The gold market is not seeing much reaction to the latest employment data as prices recover from Wednesday’s sharp selloff. Spot gold last traded at $2,043.20 an ounce, nearly unchanged on the day.
Although the U.S. economy continues to create more jobs than expected, the report noted that wage inflation is becoming less of a threat to the economy.
The report said that for workers who stayed in their job saw their wages rise 5.6% last month, down compared to November’s increase of 5.6%. Wages have been steadily declining since September 2022.
“We’re returning to a labor market that’s very much aligned with pre-pandemic hiring,” said Nela Richardson, chief economist, ADP. “While wages didn’t drive the recent bout of inflation, now that pay growth has retreated, any risk of a wage-price spiral has all but disappeared.”
Some analysts have described the latest employment data as a “goldilocks scenario” as employment remains robust but inflation continues to ease. However, some analysts have said that the report doesn’t support an imminent rate cut from the Federal Reserve.
The following are employment changes by Industry Sector:
– Goods-producing: 9,000
• Natural resources/mining -2,000
• Construction 24,000
• Manufacturing -13,000
– Service-providing: 155,000
• Trade/transportation/utilities 15,000
• Information -2,000
• Financial activities 18,000
• Professional/business services 1,000
• Education/health services 42,000
• Leisure/hospitality 59,000
• Other services 22,000
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