What is Unemployment Rate?
The unemployment rate is an important economic indicator that shows the percentage of the labor force that is unemployed and actively seeking employment.
It includes all individuals aged 16 and older who are either employed or actively seeking employment, excluding those not looking for work, such as retirees, students, or those who have stopped searching for a job.
A low unemployment rate is often seen as a sign of a healthy economy, while a high unemployment rate indicates economic distress. However, an excessively low rate may suggest an overheated economy and inflationary pressures.
0–3% Very Low Unemployment
Indicates extremely low unemployment, typically seen in very strong economies.
Impact: A labor shortage may occur, potentially leading to inflation as employers compete for a limited number of workers. It may also signal an overheated economy, which could result in inflationary pressures.
3–5% Low Unemployment
This is considered full employment by many economists, where the economy is functioning efficiently and most people who want to work are able to find jobs.
Impact: Reflects a still-strong economy with a balanced demand and supply in the labor market. Some level of frictional and structural unemployment remains as part of the natural rate.
5–7%: Moderately High Unemployment
Unemployment at this level is considered elevated.
Impact on Gold & the US Dollar
If the figures come in lower than expected, it is positive for the USD.
However, if they come in higher than expected, gold may surge.
