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US Jobs Growth Miss Was a Respite for Gold—How’s the Outlook?


Aug. 9 2018, Updated 3:15 p.m. ET

US job additions disappoint

The US (IVV)(QQQ) employment data for July was released on August 3. The job additions in July reached only 157,000, lower than the expectations of 190,000 job additions. The gains were also the lowest since March. However, the miss in the July numbers is partly compensated by an upward revision in job gains for May and June, which saw increases from 244,000 and 213,000 to 268,000 and 248,000, respectively. 

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Some economists are also attributing the July miss to the closing of Toys “R” Us store chain. The chain closed the last of its 735 stores on June 29 after filing for bankruptcy. Overall, the retail sector (XRT) gained 7,000 net jobs during the month. Business and professional services gained 51,000 jobs, and the manufacturing (XLI)(CARZ) sector added a healthy 37,000 jobs.

Trade war concerns

The US job additions in July were lower than expected, which helped gold prices (SGOL)(GLD) somewhat. However, the additions in the manufacturing sector were strong. This means that the impact of the trade war hasn’t started trickling down into the businesses.

Fed’s planned path on track

Although the job additions data was slightly weaker than expected, the upward revision to previous months’ additions—as well as other robust components of the jobs report—could keep the Federal Reserve on its gradual rate hike (TLT) path.

In the next part of this series, we’ll discuss the unemployment rate and the wage growth progression for the US economy in July. We’ll also see how these factors could impact the rate hike outlook for the Fed.


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