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Updated: U.S. Economy Creates 257K Jobs In January, Strong Revisions In November, December

By Kitco News
Friday February 6, 2014 8:30 AM

Editor's Note: The article was updated to include more information from the report and comments from CIBC. The article was updated a second time with comments from Capital Economics.

(Kitco News) - The labor market continued to show good momentum as the U.S. Labor Department released a stronger-than-expected nonfarm payrolls report for January.

Friday, the Bureau of Labor Statistics said 257,000 jobs were created in January, down from December's revised level of 329,000; December’s initial report said 252,000 jobs were created. November's employment data was also revised higher to 423,000, from 353,000.

According to consensus reports, economists expected to see about 236,000 jobs created last month.

Jim Wyckoff, senior technical analyst at Kitco said the strong data caused gold to sell off. As of 8:39 a.m. Comex April gold futures were trading at $1,251 an ounce down $11.70 on the day.

The unemployment rate for January was 5.7%, slightly up from December’s reading of 5.6%; economists were expecting an unchanged reading. Economists noted that the rise in the unemployment rate was probably the result of an increase in the participation rate, which ticked higher to 62.9% from the previous level of 62.7%.

Economists have also been watching wages very closely; the report said that average hourly wages increased 12 cents in January to $12.75, following a 5 cent drop in December. The report added that over the year average hourly earnings have increased 2.2%.

The report also said that the average workweek was unchanged at 34.6 hours in January.

Not only did the U.S. economy create more jobs than expected, Andrew Grantham, senior economist at CIBC World markets, said the gains were accompanied by strong wage growth, which could add to the expectations that the Federal Reserve will hike rates in the second half of the year.

“Although policymakers will likely want to see more of a pick up before raising interest rates, at least it appears that wages are moving in the right direction now,” he said.

Paul Ashworth, chief U.S. economist at Capital economics described the U.S. labor market as “on fire” following the release of the January numbers.

“We keep trying to tell everyone that the US economy is enjoying a period of unusual strength, maybe now people will believe us,” he said. “Employment growth is clearly on fire and its beginning to put upward pressure on wage growth. The Fed can't wait much longer in that environment, particularly not when interest rates are starting at near-zero.”

Earlier in the week, private payrolls processor ADP said that companied created 231,000 jobs last month, down from December's revised gains of 253,000.

By Neils Christensen of Kitco News; nchristensen@kitco.com
Follow Neils Christensen @neils_C



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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