Gold and silver finished the week having posted impressive gains thanks to a slew of US economic data that, for the most part, really missed the mark. There were quite a few different pieces of data dealt throughout the 5-day trading session, but the theme for investors was employment data. Being the first full week of May trading, the investing world was hinging on all sorts of different employment figures from the United States.
As for happenings in other parts of the world, there really weren’t many. Instead, the focus remained solely on the United States as investors wanted to use this week’s data in order to gauge when the Federal Reserve might move to give interest rates another boost. To make a long story short, the tone of this week’s data has many people under the impression that interest rates are going to stay put for the foreseeable future barring any fresh, fundamental change in the tone of economic data.
Employment Data Mostly Misses the Mark
As is the case almost any time a new weeks gets underway, the investing world was very much concerned with what the large batch of employment data would have to say about job and wage growth throughout April. As is typically the case, the week’s employment data began on Wednesday with the ADP private-sector jobs growth report. Even though most people were expecting to see at least 195,000 new private-sector jobs added to the economy last month, ADP reported that barely over 150,000 jobs were actually created. Without much thinking you can see that this report missed the mark, but the ADP report is not historically the most important piece of jobs data dealt and, as such, it was mostly overlooked by the investing world.
Then, a day later, the market was left to contend with the weekly jobless claims report from the United States. Even despite some choppy economic data recently, the weekly jobless claims report is one that has consistently been positive. This week that did not prove to be the case as it was reported that first time claims for unemployment benefits rose by about 17,000. This brought the seasonally-adjusted average number of claims back above the 270,000 threshold and did well to kill any optimism people held with regard to the US employment situation.
Finally, and as if things could not possibly get any worse, Friday brought about the most important piece of US economic data—April’s non-farm payrolls report. Even with the previous two days’ worth of data, there was still many people who expected that this report would be positive in nature. Unfortunately, the tone of the week had been set and there was nothing that was eveer going to change that. According to the Department of Labor, the United States only added about 160,000 new jobs to the economy last month. Compared to expectations of a rise in jobs of more than 200,000, this data point very clearly missed the mark.
As we move forward through the month of May, the weekly jobless claims report is going to be eyed with more and more scrutiny each week. It seems as though we are reaching a crossroads of sorts, where if the tone of US economic data does not improve quickly, interest rate hikes may be out of the cards for quite some time. Though it may not seem like it now, May will prove to be a pivotal month for the future of interest rates.