Gold prices holding steady, flat on the day above $2,000 as ADP said 296K jobs created in April
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(Kitco News) - The gold market is under pressure but holding solidly above $2,000 an ounce as the U.S. labor market continues to fire on all cylinders as private companies created more jobs than expected last month, according to the latest employment report from private-sector payrolls processor ADP.
Wednesday, ADP said that 296,000 jobs were created in April. The data significantly beat expectations as economists were looking for job gains of around 148,000.
However, the report also noted that while companies are hiring more workers, wages are not going up, easing fears of rising inflation.
"The slowdown in pay growth gives the clearest signal of what's going on in the labor market right now. Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines. Our data also shows fewer people are switching jobs," said Neila Richardson, chief economist at ADP.
The gold market is not seeing much reaction to the healthy labor market data. June gold futures last traded at $2,021.50 an ounce, roughly flat on the day.
Looking at wage data, the report said that wages for people who stayed in their current positions saw their paycheck increase 6.7% in the last 12 months. However, employees who changed jobs last month saw their wages drop sharply, rising 13.2% in the last 12 months, down from March's increase of 14.2%. The report said this is the slowest pace of wage growth since November 2021.
"Last month brought a burst of hiring even as pay gains for job changers slowed dramatically," the report said.
According to some economists, the wage growth data could provide some bullish momentum for gold as it could cool inflation expectations, giving the Federal Reserve room to end its tightening cycle. Markets are expecting the Federal Reserve to raise interest rates by another 25 basis points later this afternoon; however, if inflation fears start to abate, this could be the last rate hike for the central bank, some analysts have said.
However, other analysts note that if the labor market continues to grow, it's only a matter of time before wages increase again.
"This is a strong number, and it highlights why the Fed's job is so tough. They can't reasonably hike much more without torching the banking system, but nearly 300K jobs show that wage pressure isn't dead," said Adam Button, chief currency strategist at Forexlive.com.
Looking at the employment stats, the report noted broad-based gains throughout all sectors of the economy. The goods-producing sectors saw employment gains of 67,000 jobs. Natural resources and mining created 52,000 jobs last month, the construction sector hired 53,000 new workers, and the manufacturing sector saw job losses of 38,000.
At the same time, the services sector saw growth of 229,000 jobs last month. The only segments of the service sector to see job losses were professional and business and financial services, which saw losses of 16,000 and 28,000 jobs, respectively.
Trade/transportation and utilities created 32,000 jobs last month, the information sector created 2,000 jobs, education and health services created 69,000 jobs, the hospitality sector created 154,000 jobs, and "other" services created 16,000 jobs.