Unemployment Rate
The unemployment rate measures the percentage of the labor force that is actively seeking work but unable to find employment.
Meaning in Practice
The unemployment rate is calculated by dividing the number of unemployed individuals by the total labor force. It is typically reported monthly by national statistical agencies. The indicator reflects labor market conditions and economic health.
Why It Matters
Low unemployment suggests strong labor demand and economic growth, while high unemployment signals economic weakness. Central banks monitor it when assessing inflationary pressures and wage dynamics. It influences fiscal and monetary policy decisions.
Market Impact
Falling unemployment can increase expectations of wage growth and tighter monetary policy. Rising unemployment may lead to lower bond yields and defensive equity positioning. Markets react strongly to unexpected changes in labor data.
Example
If the unemployment rate declines from 6 percent to 5 percent, it indicates improving labor market conditions.