GoldPrice.

The number of Americans filing applications for unemployment benefits dropped unexpectedly last week, signaling ongoing strength in the labor market. Jobless claims came in at 221,000 vs 225,000 expected.

Key Takeaways

• Initial jobless claims dropped by 8,000 for the week ended March 16, 4,000 more than expected.
• While economic growth has slowed along with the pace of job growth, the US labor market is not done tightening as it continues to show healthy activity.
• However, the four-week moving average rose by 1,000 to 225,000.

Initial claims, which measure layoffs, hit a one-month low after dropping by 8,000 in mid March according to a Labor Department report released on Thursday. The less-volatile monthly average rose by 1,000 to 225,000 while the number of continuing claims, people already collecting benefits after an initial week of aid, dropped by 27,000 to 1.7 million.

After dropping below the threshold of 300,000 in 2015, jobless claims have remained within that range, pointing to a strong labor market which has undoubtedly helped prop up weaker areas of the economy, such as housing.

The monthly average of initial claims dropped to a 49-year low of 206,000 last September, rising 30,000 in mid-February before stabilizing.

The unemployment rate is currently 3.8% and wage growth rose to an approximate ten-year high last month. Average job growth has dropped to 165,500 per month compared to 223,250 per month last year as the effects of a $1.5 trillion tax cut scheme begin to diminish. The ongoing trade war is also impacting economic activity in the US and internationally.

Nonfarm payroll claims dropped 11,000 between February and March, pointing to a pickup in hiring. The February slowdown in job growth with only 20,000 new jobs was attributed to a lack of skilled workers in a tight labor market.

S&P futures vs fair value: -14.90. Nasdaq futures vs fair value: -37.40.
The S&P 500 futures trade 15 points, or 0.5%, below fair value.
The latest weekly initial jobless claims count totaled 221,000, while the consensus expected a reading of 223,000.

— BBE Investments (@BBE_Investments) March 21, 2019

Q4 Slowdown

The Federal Reserve chose to hold interest rates steady in their rate decision on Wednesday, and policymakers indicated that there wold be no further rate increases or 2019. The central bank commented on the health of the labor market vs that of the economy in general, saying “the labor market remains strong but growth of economic activity has slowed from its solid rate in the fourth quarter.”

Market Reaction

Gold has risen sharply today and last traded up 1.25% at $1,316.78/oz with a high of $1,320.21/oz and a low of $1,301.34/oz, with the line of psychological support at $1,300 holding firm.

The strong labor market report has done little to damper the gains in the price of gold, which also withstood a Thursday report indicating renewed strength in manufacturing. Gold seems to be ignoring financial data and is maintaining its gains, with April Comex Futures trading at $1,317.70/oz, up 1.23%.