March non-farm payroll data
The non-farm payroll (or NFP) shows the number of jobs added or lost each month. The Bureau of Labor Statistics (or BLS) released the employment situation summary for March on April 3. The NFP employment figure increased by 126,000, well below Wall Street expectations of 235,000. The monthly ADP National Employment Report predicted the number would come in at 189,000.
NFP represents the total number of paid US workers of any business, excluding farm workers, private household employees, and nonprofit organization employees.
Why jobs data matter
The jobs report serves as an important barometer of economic health and growth across all sectors of the economy. A declining unemployment rate or a rising payroll trend both indicate increased business activity.
More jobs also mean more money in the hands of consumers and an increase in overall consumer spending. The Fed also assesses jobs data to determine whether the economy is strong enough to withstand higher interest rates.
Implications for gold investors
The weak jobs report sent the US dollar lower, which has a positive impact on the gold markets.
A weak labor market is negative for the economy since it translates into lower consumer spending, which forms about two-thirds of the US economy. It’s also usually positive for gold prices and ultimately gold-backed ETFs such as the SPDR Gold Trust ETF (GLD).
Other affected investments include Eldorado Gold Corp (EGO), Agnico Eagle Mines (AEM), and Yamana Gold (AUY), as well as ETFs that invest in these stocks such as the VanEck Vectors Gold Miners Index ETF (GDX). AEM and AUY make up 9.1% of GDX’s holdings.