US Jobs Growth Underwhelms in March: Will Gold Shine?
US jobs growth underwhelms
The US jobs report showed only 98,000 job additions in March 2017. That was much lower than the consensus estimate of 180,000 jobs. The number for February 2017 was 235,000. The March numbers were the worst since May 2016, which could have something to do with weather issues such as the snowstorm in mid-March. That could have impacted retail and construction jobs, which were particularly lower than expected.
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Unemployment and wage growth
The unemployment rate, however, fell 0.20 percentage points in March compared to February. It now stands at 4.5%, a ten-year low. It’s worth noting that achieving a full employment level is one of the Fed’s objectives, which supports its monetary tightening plan.
Wages in March 2017 rose 2.7% compared to March 2016. While this is a strong number, it’s slightly below the historical average. However, it was in line with market expectations.
While the US jobs report for March was slightly underwhelming, it might not be enough to deter the Fed from hiking interest rates.
Impact on gold
There are still a few more months of data to consider before the Fed meets in June. But overall, a positive trend in the US jobs market should support higher rates in the future. That’s most likely negative for gold (GLD) as an investment. Gold, along with stocks such as Barrick Gold (ABX), Franco-Nevada (FNV), Silver Wheaton (SLW), and Royal Gold (RGLD), will be driven by economic data from the United States and the rest of the world.
Funds such as the VanEck Vectors Gold Miners ETF (GDX) invest in these stocks. ABX accounts for 5.5% of GDX’s holdings.