At the time this article was published, gold prices had risen over several preceding weeks as softer economic data increased expectations of Federal Reserve interest-rate cuts. Ongoing trade-war concerns had repeatedly weakened sentiment, while stock valuations near record levels made precious metals appear more appealing to investors.
Historically, lower interest rates have often increased demand for precious-metal assets, and the Federal Reserve’s recent policy comments then indicated greater concern about economic growth. Further weakening in data could deepen those concerns. Looking across U.S. labor-market trends, the article found little evidence of a reversal in the coming months. Outside influences included the U.S. dollar’s value and the outlook for a U.S.-China trade resolution. Even so, economic reports could remain the leading influence, so precious-metals investors were encouraged to understand broader trends in these areas.
Nonfarm Payrolls Report
In May, U.S. nonfarm payrolls increased by 75,000, falling short of expectations for 185,000 new jobs. April’s gain was revised down to 224,000. Healthcare and business/professional services were principal areas of strength. In 2019, average monthly hiring was 164,000, well below the 224,000 monthly average recorded in 2018:
Between 1939 and 2019, U.S. nonfarm payrolls averaged 125,700. The record high came in September 1983, with 1.12 million new hires; the record low was -1.9 million jobs lost in September 1945.
ADP Employment Report
In the United States, Automatic Data Processing’s monthly report is an important measure of private-business hiring. For May, its report showed 27,000 new hires. That result was well below analysts’ expectation of 180,000 new hires and weaker than April’s downwardly revised 271,000 private hires. At publication, the article characterized it as the smallest payroll increase since the first quarter of 2010:
Between 2001 and 2019, the ADP report averaged monthly job growth of 78,000. In February 2006, this measure recorded its highest reading, at 360,000. By contrast, in February 2009, it reached its lowest point, falling by -706,000 jobs.
U.S. Unemployment Rate
In May, the U.S. unemployment rate remained at 3.6%, which represented a 49-year low:
From 1948 to 2019, the U.S. unemployment rate averaged 5.75%. It reached its record high in November 1982 at 10.8% and its all-time low in November 1953 at 2.5%.
Labor Participation Rate
The labor-force participation rate counts people in the United States actively seeking work. In May, that measure remained unchanged at 62.80%.
From 1950 through 2019, the U.S. labor-force participation rate averaged 62.99%. It reached a record 67.3% in January 2000 and an all-time low of 58.10% in December 1954.
At publication, Overall, the article argued that a low labor-force participation rate significantly undermined the apparent progress in U.S. unemployment figures. If that pattern continued, it said, speculation about Federal Reserve rate cuts could increase and potentially support gold prices as investors shifted away from riskier assets toward safe-haven precious metals.
