The U.S. released their April non-farm payroll (NFP) numbers sending shock waves across the financial world.
A poll conducted by Reuters last week predicted non-farm payroll to increase by over 202,000 compared to 208,000 in March.
Economists were shocked when actual numbers only hit 160,000, far from the 12 month average of 232,000. This marks the smallest NFP gain in seven months. Of those jobs 65,000 were created by professional and business firms.
Mining accounted for 7,000 jobs lost as metals prices continue to fall.Unemployment remained unchanged at 5%.
Nonfarm payroll is one of the best ways to measure an economy’s growth. An employment slowdown coupled with a weak GDP in the first quarter signals a slowing U.S. and world economy. NFP numbers can fluctuate sharply leaving analysts to hope they will rebound quickly.
Not surprisingly with numbers well below forecasts, the U.S. and European markets have continued their decline since the announcement. The Dow has fallen 61 points and the European exchanges are down 1-1.8% since the announcement. The release also caused the FTSE 100 to drop 70 points to an 8 week low of 6,054.74.
In response to the NFP release, the dollar weakened dramatically, with USDJPY dropping as far as 106.50 before leveling off at 1.1400.
Gold was the biggest winner in the NFP release, again benefitting from a volatile US dollar. Between weak payroll numbers and a potential Fed rate hike this summer gold prices continue to court the $1300/oz mark.
Anthony Young
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