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Market News The U.S. small non-farm ADP in May was unexpectedly lower than expected, and the price of gold rose by $3 in the short-term

The U.S. small non-farm ADP in May was unexpectedly lower than expected, and the price of gold rose by $3 in the short-term

During the New York session on June 2, the United States announced the May non-farm APD employment data that the market was concerned about, and the result was unexpectedly lower than expected. After the data was released, the spot gold price rose by $3 in a short-term.

2022-06-02
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During the New York session on Thursday (June 2), the United States announced the May non-farm APD employment data that the market was concerned about, and the result was unexpectedly lower than expected. After the data was released, the spot gold price rose by $3 in a short-term.


Spot gold price short-term 5-minute chart

Specific data show that the US ADP employment in May actually released 128,000, expected 300,000, the previous value of 247,000. U.S. ADP payrolls increased by 128,000 in May, the smallest gain since February 2020.

The ADP report showed that construction employment fell by 2,000 in May after an increase of 16,000 in April. Trade/transportation/utilities payrolls increased by 8,000 in May after gaining 15,000 in April. Employment in financial services increased by 10,000 in May after increasing by 8,000 in April.

Professional/business services employment rose by 23,000 in May after rising by 50,000 in April, the ADP report showed. Manufacturing payrolls increased by 22,000 in May after a gain of 25,000 in April.

ADP chief economist Nela Richardson noted that monthly job creation was closer to pre-pandemic levels against the backdrop of a tight labor market and high inflation. Job growth has slowed across all industries, while small businesses remain a concern as they struggle to keep up with the recent boom of larger companies.

Institutional analysis of U.S. ADP employment data pointed out that U.S. companies added fewer jobs in May than expected, indicating that although U.S. job vacancies in May were close to a record level, it was difficult for employers to recruit employees in the month. The lower-than-expected figures suggest that companies are still struggling to recruit from their limited workforce. That said, persistently high inflation and falling savings rates are likely to lure more Americans to work in the coming months.

Such a development is good news for the Fed, as it hopes that higher labor force participation will reduce demand for workers, which in turn slows wage growth and inflation, an agency analyzing U.S. ADP employment data said. That could take a while to come, as a separate report on Wednesday showed U.S. job creation fell in April from a record level the previous month, but remained elevated. About double the number of unemployed people in the United States.

Companies are experiencing labor shortages, and the U.S. job market is still tight. The mismatch between labor supply and demand makes it difficult for enterprises to recruit workers. Data from the U.S. Department of Labor also shows that there are currently 11.5 million vacancies in the U.S. job market, but the corresponding available labor force is only 5.9 million.

According to the analysis, companies choose to lay off employees, on the one hand, because of the rising wages of employees and the need to save costs;

In the first two years of the outbreak, benefiting from zero interest rates and epidemic prevention and control measures, leading high-tech companies in the U.S. developed rapidly against the trend and gained considerable profits. Due to the needs of development, these leading high-tech companies began to Scale up, keep hiring, and retain talent with salary increases.

However, the macro environment has now changed. At present, inflation is high, the Federal Reserve has aggressively raised interest rates, the epidemic prevention and control measures have been greatly relaxed, consumption has shifted from commodities to services, and the growth prospects of consumer spending are also declining. Changes, corporate profits than expected. To this end, many technology-based companies have to cut costs through layoffs.

The U.S. unemployment rate was flat at 3.6 percent in April, according to data released last month by the U.S. Bureau of Labor Statistics, while nonfarm payrolls increased by 428,000 in the month, unchanged from a revised 428,000 in March. Despite the recovery in the job market, the labor force participation rate has room to rise. Data show that the U.S. labor force participation rate fell by 0.2 percentage points month-on-month to 62.2% in April, 1.2 percentage points lower than before the epidemic.

Some employers compete for talent by raising wages. Average hourly earnings rose 0.3% in April, the data showed, slightly slower than the 0.5% monthly gain in March and an annual increase of 5.5%. Barclays Capital Securities forecast average hourly earnings to rise 0.3% in May.

In fact, the salary increase did not start this year. As early as February 2021, the Biden administration proposed a salary increase plan, saying it would raise the minimum wage to $15 an hour by June 2025.

The analysis believes that during the epidemic, the salary increase method is indeed applicable. When the epidemic is serious, it is generally difficult for companies to recruit employees, and they have to use salary increases to attract employees. But because of the tight labor market, many people tend to jump ship for higher-paying jobs. Salary increases will not only put pressure on service industry companies, but on the other hand, they will also push up inflation to a certain extent, forming a spiral.

The analysis pointed out that the current U.S. labor force participation rate is slowly improving, and the U.S. labor market will enter a new stage next, that is, the labor market tension will no longer exist, the unemployment rate will gradually rise, and more industries will experience layoffs. U.S. monetary policy is tightening rapidly, the overall economy is under pressure, and consumers are becoming less receptive to rising prices for goods and services.

At GMT+8 20:20, the spot gold price was quoted at $1,832.00 per ounce.
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