Employment is so integral to the U.S. economy that it serves as the best indicator of its overall health. That's why, at 8:30 a.m. ET on the first Friday of every month, investors not just in the U.S. but across the globe closely examine the new jobs report from the U.S. Bureau of Labor Statistics. While employment is a critical measure of the U.S. economy, the U.S. economy itself plays a significant role in global markets. Want proof? Let’s delve into details of the already available private-sector jobs report and the upcoming non-farm payrolls.
In August, private-sector job growth came in much lower than expected, raising concerns ahead of today’s official report.
According to ADP, private-sector employment increased by just 99,000 jobs last month—far below the 145,000 forecast by economists. This shortfall has heightened investor anxiety, as it signals possible economic weakness. The disappointing data fueled fears of a recession and set a negative tone for the upcoming jobs report.
Ahead of this report, Wall Street has become increasingly cautious. As a result, the S&P 500 fell 0.3% on Thursday, marking its third straight day of losses as investors hesitated to take on riskier assets.
But the trouble doesn’t end here: the much-anticipated August NFPs report is set to be released today. Last month’s data showed U.S. employers added just only 114,000 new jobs, far below the 174,000 analysts were expecting. This time, Wall Street is forecasting 164,000 new hires. But what happens if they fall short?
It could get messy – again. When July's poor jobs numbers were released, the markets reacted dramatically. A stronger-than-expected report today could ease recession fears, suggesting the U.S. economy needs less intervention from the Federal Reserve. However, a weaker-than-expected result could send markets into a tailspin, with investors panicking.
The dollar index has already weakened, starting Friday's trading session lower as major rival currencies gained ground. The DXY fell below 101 and was on track for its third straight day of decline. However, things could still shift before the day ends, depending on the jobs report outcome.
It's a well-known rule: when the dollar falls, gold prices rise. Gold prices climbed on Friday morning, extending their gains for the week. The precious metal is now on track for a 1% weekly gain, with prices hovering near $2,520 per ounce, just 0.5% away from its all-time high of $2,530 per ounce.
Uncertainty in the economic or geopolitical landscape often drives risk-averse buyers to gold, which, in its role as a safe haven, looks like a solid buy.
