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Updated: U.S. Economy Creates 126K Jobs In March, Lower Revisions For February and January

By Kitco News
Friday April 3, 2014 8:30 AM

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

(Kitco News) - The U.S. labor market cooled significantly last month, as the U.S. Labor Department released a weaker-than-expected nonfarm payrolls report, dropping below 200,000.

Friday, the Bureau of Labor Statistics said 126,000 jobs were created in March, down from February’s revised number of 264,000; February’s initial report pegged the growth at 295,000 jobs. January's employment data were also downwardly revised to 201,000 from 239,000

According to consensus reports, economists expected to see about 246,000 jobs created last month.

Although the number of jobs created dropped dramatically in March, the report said that the unemployment rate remained unchanged at 5.5%. The data shows the participation rate dropped slightly to 62.7% from 62.8% in February.

Inflation pressures ticked slightly higher as the report said that average hourly wages increased by seven cents last month to $24.86. The data shows that wages have increased 2.1% in the last 12 months.

Adam Button, currency analyst at Forexlive.com said that some market professionals might end up dismissing the much weaker than expected report on the weather problems again. "But the easy answer is always to blame the weather," he said.

Gold markets are closed in recognition of Good Friday, but sport currency markets are trading regularly. The U.S dollar has lost significant ground against the euro following the weaker than expected report. EUR/USD 1.09978 following the data. A weaker U.S. dollar should be positive for gold when electronic markets open Sunday at 6 p.m. EDT.

However some analysts have warned traders to be careful interpreting the market's reaction to the employment data, lower trading volume could create extremely volatile markets.

Andrew Grantham, senior economist at CIBC World Markets noted that with January’s and February’s downward revision, which showed a decline of 69,000 jobs, March’s data could be interpreted that only 57,000 new jobs were actually created.

Despite the weaker data Grantham did manage to find a bright spot, saying this report is not expected to shift the Federal Reserve’s decision to eventually raise interest rates sometime this year.

“Following 12 consecutive months of 200K+ readings, one or two soft payroll figures won’t derail the underlying healthy trend. The 6 and 12 month averages for headline payrolls gains are still both running at around 255K even after today’s disappointment,” he said. “As long as the disappointment in employment doesn’t extend too far into the year, and GDP growth picks up as we expect in Q2, more important will be whether a strengthening trend in wages continues over the coming months.”


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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