Jakarta, CNBC Indonesia – The United States (US) labor market is starting to cool. This is reflected in the increasing unemployment rate and slowing job creation in the sector nonfarm payrolls.
This worsening labor data is good news for the world because it reflects slowing inflation, allowing the US Central Bank (Federal Reserve/The Fed) to soften.
Nonfarm payrolls increased by 150,000 on the month, the Department of Labor reported on Friday (3/11/2023). This data is lower than the Dow Jones consensus estimate which predicts an increase of 170,000, quoted from CNBC International.
The US unemployment rate also rose to 3.9% in October. This figure was higher than market projections and contrary to expectations that the figure would remain stable at 3.8%.
Markets reacted positively to the report, with futures contracts tied to the Dow Jones Industrial Average adding 100 points.
Weakening data is a negative sentiment for the labor market, because it will be more difficult to get a job in the US. On the other hand, this can be a positive sentiment for financial markets.
The slowdown in the labor market allows inflation to decrease, because people’s purchasing power experiences a slowdown. Controlled inflation allows the Fed to be looser with its policy of tightening interest rates.
Today’s labor data further confirms the labor market has cooled.
Last Thursday, the US also reported that unemployment claims rose by 5,000 to 217 thousand in the week ending October 28. This number is above market expectations, namely 210,000.
For the record, the US labor sector came into sharp focus last October because of the demonstrations besra-a large scale carried out by thousands of workers in the automotive, entertainment and health sectors.
US Labor Data shows that around 48,100 workers demonstrated last October. This figure is the highest record since February 2004 or 19 years ago. US employment data is one of the Fed’s big considerations in determining interest rate policy.
If US unemployment increases then this will be good news for the Indonesian financial market because it could cause it to soften further in the future.
[Gambas:Video CNBC]
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