Job Growth Cools Slightly in February: What it Means for Precious Metals

Scales are tipping in favor of rate cuts

The private sector added 140,000 jobs in February, showing improvement but falling slightly below analyst forecasts for 150,000. This information comes from the payroll processing firm ADP. While slower than predicted, the growth reflects a still-active labor market.

Several industries saw gains. Leisure and hospitality led the way with 41,000 new positions, followed by construction (28,000). Trade, transportation, utilities, finance, and other services also added jobs. Most growth occurred in larger companies and within the services sector.

Importantly, pay increases for workers who didn't switch jobs slowed to 5.1% – the smallest rise since August 2021. This could hint at easing inflation pressures and Fed rate cuts this year.

Gold and silver prices have been inversely coupled with Federal Reserve interest rates. Future rate cut expectations could signal higher precious metals prices.

The ADP report arrives as economists closely watch the labor market for signs of economic health. Will 2024 see a slowdown after a decent 2023?

ADP's chief economist Nela Richardson notes:

Jobs are still being added steadily, and while pay increases are slowing, they're outpacing inflation. There's a lot going on, but nothing yet indicates the Fed will change its approach to interest rates.

The ADP data comes ahead of Friday's official job numbers from the Labor Department. ADP's figures have recently been lower than the government's report. Economists anticipate a Friday count of 198,000 new jobs.