Slower US Job Growth and Rising Unemployment

Recent data point to a slowdown in job growth in the US, but the figures still reflect a healthy situation in June. The unemployment rate has risen to 4.1%, increasing the Fed’s chances of controlling inflation without leading to an economic recession.

According to the employment report from the Labor Ministry’s Bureau of Labor Statistics, nonfarm payrolls increased by 206,000 jobs last month. Data for May has also been revised to show that 218,000 jobs have been added instead of the previous reported figure of 272,000.

In terms of the impact of this news on the markets, most of the S&P 500 E-minis indices are unchanged. The benchmark 10-year US bond yield fell 3 basis points to 4.317%. The dollar index saw a decline of 0.18% to 104.97.

Regarding expert comments, Scott Wren, chief global markets strategist at Wells Fargo Investment Institute, said these figures are in line with the Fed’s forecast, as they point to a slowing economy and slightly lower wage growth, with a wage rate below 4%. This is in line with the Bank’s vision for next year.

Keith Lerner, co-chief investment officer, expressed his belief that the economy is currently experiencing a cooling rather than weakness, and noted that the 4% unemployment rate plus the unemployment rate may catch the Fed’s attention and give it the flexibility in which it may start cutting interest rates, and expectations suggest that it could happen in September..

Peter Cardillo, chief market economist at Spartan Capital Securities, added that the labour market is still producing jobs and the rate of slowness is rising, but the text is incomplete and it is not clear if there is a final sentence. Please provide more information so I can help you better.

The main factors that cause unemployment

Several main factors can cause unemployment, including:

Economic recession: When economic activity declines and economic growth slows, it can lead to a decrease in demand for labor and thus increase unemployment rates. During recessions, employers may cut jobs or freeze hiring.

Changes in the structure of the economy: Some industries may undergo changes in the market structure, such as technology shifts or structural changes, leading to a decline in the demand for labor in those industries. While other industries can emerge and provide new jobs, shifting from one sector to another can be difficult for some workers and lead to unemployment.

Skills mismatch: There may be a mismatch between the skills possessed by individuals and the skills required in the labor market. When there is a gap between the skills required and those possessed by workers, it can be difficult for individuals to find suitable jobs, increasing unemployment rates.

Employment and employment policies: Government and regulatory policies may affect the labor market and unemployment rates. These policies may include restrictions on hiring or enhanced labor protections, and may lead to increased costs for employers and reduced willingness to hire more workers.

Demographic factors: Demographic changes, such as an increase in the number of fresh graduates or an increase in immigration rates, can affect unemployment rates. When the number of job applicants increases more than the available opportunities, it can be difficult for everyone to find job opportunities.

These are some of the main factors that can affect unemployment rates. These factors may vary from country to country and are influenced by the economic and social conditions in each country.

Economic and social effects of unemployment

Unemployment has important economic and social impacts, and the following are some of the main effects of unemployment:

Economic impacts:

  • Economic costs: Unemployment causes enormous economic costs to society. When there are a large number of unemployed individuals, economic production decreases and economic growth declines, negatively affecting a country’s gross product.
  • Decline in government revenues: High unemployment rates can lead to a decline in government revenues, as the level of taxes paid decreases and government spending on social benefits and support programs for the unemployed increases.
  • Reducing demand for goods and services: The presence of a large number of unemployed means a decrease in the purchasing power of individuals, and therefore a decrease in demand for goods and services, which negatively affects companies and can lead to a reduction in the volume of production and the loss of opportunities for economic growth.
  • Labour market disruptions: High unemployment rates can lead to labor market instability and low level of trust between employers and workers. This may lead to increased social tensions, protests and social unrest in the community.

Social impacts:

  • Loss of trust and social satisfaction: Persistent unemployment may lead to a loss of trust and social satisfaction among individuals. They can feel frustrated and unable to meet their basic needs and achieve their ambitions, leading to deterioration of social relationships and increased psychosocial problems.
  • Low level of education and skills: Lack of work can affect individuals’ ability to develop their skills and gain new experiences. Interest in education and training may decline, leading to a deterioration in the educational and professional level of individuals affected by unemployment.
  • Impact on family life: Unemployment can affect family life and social relationships. Financial stress and uncertainty from work can increase family tensions and conflicts, and may lead to family disintegration and negative repercussions on children, their education and development.

These are some of the main economic and social effects of unemployment. It should be noted that these impacts can vary from country to country and depend on the economic and social conditions of each country.

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