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Copper Futures Slide on Weak US Labor Market

Strategic Insights

— 2 min read

Copper prices declined on Friday after data showed that the US labor market remains weak, raising concerns about the economic outlook for the world's second-largest consumer of the industrial metal. The US economy added only 18,000 jobs last month, a significant shortfall from the expected increase of 125,000. The unemployment rate rose for a third straight month to 9.2%. The weak labor market data weighed heavily on copper futures, causing the most actively traded contract to drop 4.4 cents, or 1%, to $4.398 a pound on the Comex division of the New York Mercantile Exchange.

Key Takeaways:

  • Copper prices declined due to weak US labor market data, with the most actively traded contract slipping 4.4 cents, or 1%, to $4.398 a pound.
  • The US economy added only 18,000 jobs last month, a significant shortfall from the expected increase of 125,000.
  • The unemployment rate rose for a third straight month to 9.2%.
  • Copper is sensitive to the economic outlook because of its widespread uses in manufacturing and construction.
  • Analysts focus on the labor market as a key barometer of the country's economic health.
  • The weak US jobs data was a major concern for the copper market, with Dave Meger, vice president and director of metals trading at Vision Financial Markets, stating that copper is "going to fall" due to the weak US jobs data.
  • Potential mine production disruptions have also lent support to copper prices, with workers at Chile's state-controlled Corporacion Nacional del Cobre announcing plans to strike for 24 hours on Monday.
  • Analysts with Morgan Stanley and Goldman Sachs reiterated their bullish view on copper, citing expectations for global economic growth and Chinese metals consumers' restocking of depleted inventories during the second half of the year.

Statistics:

  • 18,000: the number of jobs added to the US economy last month, a significant shortfall from the expected increase of 125,000.
  • 9.2%: the unemployment rate rose for a third straight month.
  • 4.4 cents: the decline in the most actively traded copper futures contract.
  • $4.398: the price of the most actively traded copper futures contract on the Comex division of the New York Mercantile Exchange.
  • 125,000: the expected increase in jobs added to the US economy last month.

Sources:

  • Dow Jones Commodities News via Comtex
  • Matt Day, Dow Jones Newswires
  • Dave Meger, vice president and director of metals trading at Vision Financial Markets
  • Ira Epstein, director of the Ira Epstein division of the Linn Group
  • Morgan Stanley
  • Goldman Sachs
  • Corporacion Nacional del Cobre

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