US markets are closed today in observance of Good Friday. The U.S. Department of Labor did, however, release its non-farm payrolls data for March earlier this morning.
The jobs data for March was a clear disappointment and seemingly without explanation. The U.S. added just 126,000 jobs while the unemployment rate held steady at 5.5 percent. The 126,000 jobs was the lowest total since December 2013 and was well below even the most bearish forecasts. Consensus estimates were looking for an increase of 245,000 jobs.
The poor jobs data will likely be a deal breaker when it comes to the potential for a rate hike in June. The Fed has said that it would base its decisions on the data being released, and today’s jobs data was really a significant step backwards. The surprising miss today also begs the question: Why is the number so poor-what happened?
There could be several explanations for today’s poor jobs data. Some have cited a rough winter while others simply believe that the U.S. economy hit a rough patch in the first quarter and that hiring is likely to rebound quickly.
While it is too early to tell if the jobs data and revisions to previous data is simply an anomaly, many remain upbeat on the U.S. economy and in fact some companies are expanding. The notion of rates remaining lower for longer along with little inflation may help keep the economy on an upwards trajectory.
While stock index futures were sold off on the news, the real reaction will not come until Monday when U.S. markets reopen. Volatility may be seen early in the week as investors attempt to make heads or tails of the data.
Gold may potentially get a nice boost from the data miss. The notion of the Fed remaining on hold or lowering the trajectory for its pace of rate hikes may work in gold’s favor. In addition, should stocks begin to see further weakness based on the report, gold may also potentially see some flight to safety buying.
Gold prices have been trending higher the last two weeks, and are currently sitting right at the psychologically important $1200 level. Gold recently hit resistance at the $1220 level and backed off. The poor jobs data may be just the catalyst the gold bulls need in order to take prices higher above near term resistance. If the dollar weakens based on the poor jobs data, the gold bulls may also be encouraged as recent dollar strength has likely played a role in gold’s lack of bullish momentum.
