GoldPrice.

US initial jobless claims came in below expectations last week, indicating ongoing strength in the labor market. Jobless claims rose to 211,000 for the week ended January 18, coming in at 4,000 fewer claims than forecast by economists. While hiring has slowed considerably over the last year, layoffs remain low with unemployment still at the 50-year low of 3.5%.

Key Takeaways

• Initial claims for unemployment rose 6,000 to 211,000 vs. 215,000 expected.
• The rise came after five consecutive weeks of decline in initial jobless claims.
• The four-week average of claims fell to the lowest point since September.

Claims rose last week after over a month of decline. The previous increase, a surge of claims in December, was attributed to seasonal conditions around an unusually late Thanksgiving Day holiday throwing off the model used to measure claims. The data points to a healthy market which continues to tighten in the face of a hiring slowdown, geopolitical tensions, and uncertainty surrounding the trade conflict with China.

Claims were estimated for Alabama, California, Delaware, Hawaii, Kansas, Puerto Rico and Virginia due to the Martin Luther King holiday on Monday. For the week before last, claims were revised higher by 1,000 applicants. The four-week average of claims, a less-volatile metric which irons out weekly volatility, dropped 3,250 to 213,250 last week, the lowest point since September.

The number of Americans collecting benefits after an initial week of aid fell 37,000 to 1.73 million for the week ended January 11, coming down from the peak in late 2019 which was highest point since April 2018 at 1.80 million. The four-week average of these continuing claims rose 2,000 to 1.76 million.

First Cut: Initial jobless claims up slightly in January 18 week even as effects of post-holiday layoff period fade. https://t.co/Jb16TOymot pic.twitter.com/eKAqdFloGd

— Whetstone Analysis LLC (@AnalysisLlc) January 23, 2020

Hiring

The economy added 145,000 jobs last month after an unexpected surge of 256,000 in November. In the tightening labor market, much of the hiring slowdown has been attributed to a shortage of skilled workers. However, the 18-month trade conflict between the US and China, among other nations, has also led to reduced job growth.

The manufacturing industry, which has suffered under tariffs from both countries, has seen significantly lower job growth along with layoffs due to reduced activity. There have also been increased layoffs in transportation and warehousing, construction, educational service and accommodation and food services industries in recent months, all industries affected by the trade protectionism policies in place on Chinese imports. Manufacturing grew by just 57,000 jobs last year compared to 216,000 the year before.

Market Reaction

Gold prices have increased since the release of the jobs data. Spot gold last traded at $1,561.02/oz, up 0.37% with a high of $1,564.44/oz and a low of $1,552.54/oz. The European Central Bank elected to leave interest rates unchanged as expected during its latest meeting. The WEF is currently meeting in Davos, Switzerland, and the threat of tariffs by the US administration against European nations may have contributed to upward momentum in today’s gold market.