Market importance: High importance.
Meaning: Economic data is eagerly awaited by the global financial markets, with extremely important economic, social, and political implications.
Release time: The first Friday of every month, 8:30 a.m.
Eastern time frequency: Once a month.
Coverage period: The month just ended.
Revision situation: The possibility of revision is very high.
The unemployment rate is the ratio of the labor force that has the willingness to work but does not have a job to the total labor force in a certain statistical period. This indicator can be used to judge the employment situation of the labor force in the economy during that period.
For a long time, the unemployment rate has been regarded as an indicator that reflects the overall economic situation. In the United States, it is also one of the first economic data to be released every month, so foreign exchange traders and analysts of other financial markets tend to use the unemployment rate indicator to predict other related indicators such as industrial production, personal income, and even new housing construction.
In the fundamental analysis of foreign exchange trading, the unemployment rate indicator is called the "crown jewel" of all economic indicators, and it is the most sensitive monthly economic indicator in the market.
One of the important characteristics of Keynesianism is employment priority. Although monetarism has flourished for some time, Keynes's ideas still firmly control the thinking of contemporary policymakers, and this is even more true with the rise of new Keynesianism.
Without triggering malignant inflation, the unemployment rate decreases, indicating that the overall economy is developing healthily and conducive to currency appreciation; if the situation is reversed, the unemployment rate increases, indicating that the economic development is slowing down and recession, and thus unable to create sufficient jobs, which is unfavorable to currency appreciation.
In addition, there is a close relationship between employment, economic development, inflation, and interest rates. If the unemployment rate is matched with the inflation indicator of the same period, it can be known whether the economic development is overheated, whether it will constitute the pressure of interest rate hike, or whether it needs to stimulate the economic development by an interest rate cut. In the face of the expectation of continuous interest rate hikes, it constitutes a good for the foreign exchange market.
The U.S. Bureau of Labor Statistics conducts a monthly sample survey of households across the United States. If the unemployment rate data released by the United States in that month is lower than the previous month, it indicates that the employment situation has increased, the overall economic situation is better, and it is conducive to the rise of the U.S. dollar.
If the unemployment rate data is large, it shows that the U.S. economy may be in recession, which hurts the U.S. dollar. In 1997 and 1998, the U.S. unemployment rate was 4.9% and 4.5%, respectively, and the unemployment rate declined again in 1999, reaching the lowest point in 30 years. This shows that the U.S. economy is in good condition and strongly supports the strength of the U.S. dollar against other major currencies.
Everything has two sides, just like coins have two sides. The opposite of the unemployment rate data is the employment data (The Employment Data), the most representative of which is the non-farm employment data.
The non-farm employment data is a project in the unemployment data, which mainly statistics the changes in positions outside of agricultural production, and it can reflect the development and growth of the manufacturing and service industries. The decrease in the number indicates that the enterprise reduces production and the economy enters depression.
When the social economy develops faster, consumption naturally increases, and the positions of consumption and service industries also increase. When the non-farm employment data increases significantly, theoretically it should be beneficial to the exchange rate; otherwise, it is the opposite. Therefore, this data is an important indicator for observing the degree and situation of social economic, and financial development.