Gold and silver are looking like they’re going to end the first full week of January on a positive note thanks to some weaker than expected employment data from this past December. While this week was full of economic data from around the world, no report or piece of data was more important than today’s non-farm payrolls data from the United States. Complementing today’s weak employment report was a relatively disappointing economic report out of China.
Just a few days after the FOMC minutes made it clear that members of the Fed were growing more confident in the US economy, a weaker than anticipated employment report has come in to throw everything on its head.
Market Expectations Surpass Actual Employment Data
Earlier in the week, the ADP employment report for this past December in the United States showed job additions that handily beat market expectations. Compared to market expectations of around 200,000 jobs added in December, the ADP report indicated that the actual number was around 240,000. While this periphery report was of little concern to the overall marketplace, it caused investors to think that Friday’s non-farms payrolls data would exceed market expectations as well.
Prior to today’s employment figures being published, the market more or less agreed that they would not be surprised if non-farm payrolls rose by about 200,000 a month ago. This morning when the numbers were made public the market was shocked to see non-farm payrolls for December only increase by roughly 74,000. This number was dwarfed by expert predictions and was confusing to investors who have gotten used to the mostly positive US economic data that we have been receiving over the past few months. Some market analysts were quick to give their explanation, citing a busy holiday season among other factors as reasons why the report emitted such dismal results. Many of these same experts claimed that the non-farm jobs data would be corrected before the month’s end. Whether or not the data was skewed has yet to be confirmed or denied by any official sources, but skewed data could very easily account for why today’s reports were so far off expectations.
In the wake of the employment data being made public the US Dollar sold off at a rapid pace while gold and silver were quick to make gains. Surprisingly, however, the pace at which gold and silver spot values rose was not quite on par with how shockingly bad today’s employment numbers were. The less than stellar employment data also added more fuel to the debate over whether or not the Fed should pursue further tapering measures during this new year.
Finally, dismal economic data from the United States was complemented by equally disappointing trade surplus numbers in China. An official report from Asia’s largest economy showed that China’s trade surplus dropped to $25.6 billion in December, far off November’s surplus of over $32 billion. The same report indicated that imports and exports were in the black, but all in all no one was overly pleased with what the report had to say.
Gold and silver are up this week but only slightly. This may seem discouraging to investors who are still hanging on to gold and silver but it is important to remember that a week of any gains is better than the countless negative weeks we have experienced over the past few months.