First of all the only reason the rate fell was because they assumed that 96,000 people stopped looking for a job. In realty, many of those 96,000 people are still looking for work.
Second, the jobs that were added were related to government and the service sector, both of which are temporary based on government stimulus and these jobs remove money from the economy rather than increase our overall wealth.
Third, the economy lost another 40,000 jobs in the manufacturing sector, which means we now have even less people producing things. This will continue to widen our trade deficit and increase our imports. This means we are also still losing jobs to China, India and other nations.
The most concerning issue right now is the sinking value of the dollar. Widening our trade deficit can only result in further dollar weakness.
Gold prices dropped almost $60 per ounce and the dollar strengthened on the unemployment rate news today and the news that the Fed may start rating interest rates early next year.
But I wouldn’t be surprised to see gold climb right back to a new high within a week or so, after the traders realize that this jobs report is really not going to help the dollar.