US Unemployment Rate Drops To Fresh Post-Pandemic Low

US Unemployment Rate Drops To Fresh Post-Pandemic Low
Andrew Rummer

over 2 years ago1 min

Mentioned in story

US unemployment dropped to a fresh post-pandemic low in July as more Americans than expected found new jobs. 

Unemployment fell more than forecast to 5.4%, according to a report on Friday, below the 6% average rate since the start of the century (shown in pink on the chart). The leisure and hospitality sector was responsible for the biggest increase in jobs as more restaurants and hotels reopened.

Investors reacted to the strengthening labor market by selling US government bonds (a.k.a. Treasuries) and buying stocks. The decline in bonds pushed up the yield on the benchmark 10-year Treasury by as much as 7 basis points to 1.29% as of 9am in New York as investors bet the improved jobs picture would increase the chance of inflation. Futures on the S&P 500 gained as much as 0.2% before dropping back again.

The data increases the chance the Federal Reserve (Fed) will hike rates or slow the pace of quantitative easing (QE) sooner rather than later. Officials at the US central bank have said they want to see “substantial” further progress in the labor market before taking any action.

"For the Fed, this report is the first of several strong job reports that would be necessary to signal 'substantial further progress' in the labor market," research firm Oxford Economics wrote. "As such we maintain our view that the Fed is on course to commence QE tapering in early 2022."



All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG