LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

COT Gold, Silver and US Dollar Index Report - November 15, 2019
By: GoldSeek.com

Gold Minersí Q3í19 Fundamentals
By: Adam Hamilton, Zeal Research

Did the Comex just create more 'paper gold' for price suppression?
By: Dave Kranzler

Illiquidity And Gold And Silver In The End Game
By: Darryl Robert Schoon

Precious Metals Update Video: Gold momentum turning up in oversold territory
By: Ira Epstein

Metals Market Likely Bottoming
By: Avi Gilburt, Elliott Wave Trader

Wait two years for disclosure of repo cash recipients and amounts, New York Fed tells GATA
By: Chris Powell, GATA

Precious Metals Update Video: Gold has its first real bounce
By: Ira Epstein

Asian Metals Market Update: November-14-2019
By: Chintan Karnani, Insignia Consultants

COMEX Gold Into Year End
By: Craig Hemke, TF Metals

 
Search

GoldSeek Web

 
Will Annual Wage Gain Support Gold?


 -- Published: Thursday, 13 September 2018 | Print  | Disqus 

201,000. The August job gains is an impressive number, but 2.9 percent is even better. This is the annual jump in wages. How will it affect the gold market?

 

Payrolls Accelerate in August

 

U.S. nonfarm payrolls accelerated in August. The economy added 200,000 jobs last month, following a rise of 147,000 in July (after a downward revision). However, the solid headline number was accompanying by downward revisions in June and July. With those, employment gains in these two months combined were 50,000 less than previously reported. In consequence, after revisions, job gains have averaged 185,000 per month over the last three months, or 196,000 over twelve months, still significantly above the level needed for a gradual tightening of the labor market.

 

The gains were generally in line with expectations. And they were widespread: both the professional and business services and education and health services added 53,000 jobs in August. Construction added 23,000 jobs, wholesale trade Ė 22,400, transportation and warehousing Ė 20,200, leisure and hospitality Ė 17,000. Retail trade, information, manufacturing and government cut jobs in August.

 

Although the annual pace of job creations declined slightly in August, it has remained positive, and generally in an upward trend since the fall of 2017, as the chart below shows.

 

http://www.goldseek.com/news/2018/9-13as/1.png

Chart 1: U.S. unemployment rate (red line, left axis, U-3, in %) and total nonfarm payrolls (green line, right axis, % change from year ago) from August 2013 to August 2018.

 

Unemployment Unmoved While Wages Jump

 

The unemployment rate remained unchanged at 3.9 percent. However, both the labor force participation rate, at 62.7 percent, and the employment-population ratio, at 60.3 percent, declined by 0.2 percentage points in August.

 

Importantly, the average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents to $27.16. It implies that they increased 2.9 percent over the year. It was the fastest increase in worker pay since the end of the Great Recession, as the chart below shows. 

 

 http://www.goldseek.com/news/2018/9-13as/2.png

Chart 2: Average hourly earnings of all private employees (percent change from the year ago), from March 2007 to August 2018.

 

The rise means that the U.S. solid economy is finally translating into wage gains. It is great news not only for workers (whose incomes have not kept pace with rising inflation), but also for the FOMC members who will meet this month. They can hike the federal funds rate in September with a clear conscience.

 

Implications for Gold

 

What does it all mean for the precious metals market? Well, the recent employment situation report is positive for the hawks among the U.S. central bankers, so it should upset gold bulls. Indeed, yesterday, Lael Brainard, the Fed Board Governor, said at the Detroit Economic Club that the Fed may be able to hike interest rates more times in 2019 than commonly thought. As a reminder, traders expect that the U.S. central bank will raise rates only one or two times next year. But Brainard argued that Trumpís fiscal policy lifted the neutral level of interest rates, allowing the Fed further upward moves.

 

Of course, after the FOMC meeting the outlook will be clearer. However, the broader macroeconomic context is rather negative. Although the PPI missed expectations in August, inflation is around the Fedís target. The labor market remains strong and even wage inflation accelerated. It suggests that the Fed will continue its policy of gradual tightening, exerting some downward pressure on gold prices. Hence, although the jump in wages should be positive for gold, which is a hedge against inflation, at least in the long run, it may also change the Fedís stance toward a little more hawkish one. Wage growth has been recently the labor marketís Achilles heel. So the more decisive increases in earnings could make the current FOMC even more hawkish. Stay tuned!

 

Thank you.

 

Arkadiusz Sieron

Sunshine Profits - Free Gold Analysis

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 


| Digg This Article
 -- Published: Thursday, 13 September 2018 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.