(Kitco News)— Growing weakness in the U.S. labor marke,t as private companies create fewer jobs than expected in August, continues to support higher gold prices.
On Thursday, private-sector payroll processor ADP said that 99,000 jobs were created last month. The report missed expectations, as consensus forecasts called for job gains of 144,000.
“The job market's downward drift brought us to slower-than-normal hiring after two years of outsized growth,” said Nela Richardson, chief economist, ADP, in the report. “The next indicator to watch is wage growth, which is stabilizing after a dramatic post-pandemic slowdown.”
At the same time, July’s employment data was revised lower to 111,000, jobs, compared to the initial estimate of 122,000.
The gold market was seeing healthy bullish momentum ahead of the report and has managed to push even higher in initial reaction to the disappointing data. December gold futures last traded at $2,550.60 an ounce, up nearly 1% on the day.
While the headline numbers were disappointing, the report showed that at least wages weren’t falling, with wage inflation holding steady in August. The report said that wages for workers who stayed in their jobs increased 4.8% in August, unchanged from July. At the same time, workers who changed jobs saw their wages increase 7.3%, also unchanged from the previous month.
Although the pace of job growth dropped to its lowest level since October, the report didn’t show any significant layoffs.
In a segment breakdown, the goods-producing sector saw job gains of 27,000 in August. The nature resource/mining sector created 8,000 new jobs in August; 27,000 jobs were created in the construction sector. The manufacturing sector lost 8,000 jobs last month.
Meanwhile, the service sector saw a little more volatility, creating 72,000 jobs last month. Trades/transportation and utility companies saw 14,000 new jobs last month. The IT sector lost 4,000 jobs in August; the financial sector created 18,000 new positions last month. Professional and business services reported job losses of 16,000. The education and healthcare sectors saw job gains of 29,000. The leisure and hospitality sector created 11,000 new positions and other services created 20,000 new jobs.
Analysts note that gold continues to benefit from shifting market expectations. A second day of disappointing labor market data is raising forecasts that the Federal Reserve will cut interest rates by 50 basis points later this month.
