A decline is being seen in the stock markets all over the world. There was a decline in the stock market in India also. Sensex and Nifty crashed as soon as the market opened on Monday. A decline of 7.3% was seen in Japan, 7.7% in Taiwan and 6.6% in South Korea.
After all, what is the reason for such a huge decline in the stock markets around the world? Actually, America’s jobs figures are being held responsible for this. On Friday, America released data on jobs. It was revealed that the unemployment rate in America is continuously increasing. This has created a fear of recession in America.
This jobs data from America has created a stir across the world. The question is beginning to arise whether the world’s largest economy is going to fall into recession?
What does US jobs data say?
Last Friday, America’s Bureau of Labor Statistics released data on jobs. It was told that only 1.14 lakh people got jobs in July. Whereas, till now an average of 2.15 lakh jobs were available every month.
It has been told that July was the third consecutive month when the unemployment rate increased. The unemployment rate in July was 4.3%. Whereas, earlier it was 4.1% in June and 4% in May. The unemployment rate figure in July was the highest after October 2021.
Statistics show that the unemployment rate among men was 4% and among women was 3.8%. The highest unemployment rates were among blacks and African-Americans. The unemployment rate among Black and African-Americans stood at 6.3%, whereas in July 2023 it was 5.7%.
These figures increased concern
– Unemployment rate increased by 0.2% to 4.3% in July. This month 3.52 lakh people became unemployed. A total of 72 lakh people were unemployed in America till July.
– Among the unemployed, there are approximately 11 lakh people who have been temporarily fired from their jobs. That means, they can be re-hired later. Whereas, there are 17 lakh people who have been permanently laid off by the companies.
– The number of long-term unemployed in America has also increased by more than three lakh in a year. Till July, there were more than 15 lakh people in America who were unemployed for a long time. Whereas, till a year ago, the number of such unemployed people was around 12 lakhs.
– Not only this, there has also been a slight decline in the average earnings of people in a month. The average weekly earning of a person in June was $1,200.16. In July it decreased slightly to $1,199.39.
Why is there fear of recession?
The figures released by the US government on unemployment for July have raised fears of a recession. There is a rule regarding recession in America. This rule was created by former economist Claudia Sam. This rule says that if the unemployment rate increases by even half a point from the previous year’s low level for three consecutive months, then it should be assumed that a recession has occurred.
Statistics show that the unemployment rate in America has been increasing for five consecutive months. The unemployment rate was 3.8% in March, which increased to 4.3% in July.
Not only this, in America in July, about 2.5 lakh people were laid off by companies through layoffs. Last year too, big tech companies like Apple, Microsoft and Google had made about two lakh layoffs.
There are signs of recession in America. However, some experts believe that the unemployment rate and layoffs do not indicate recession. Experts believe that the increase in unemployment rate is not due to layoffs, but due to the increase in the number of immigrants in the labor market.
Federal Reserve Bank chief Jerome Powell has also rejected the possibility of recession. He says that there are no signs of recession yet. Tara Sinclair, director of the GW Center for Economic Research, told the news agency that the unemployment rate figures do not indicate the beginning of a recession.
Why does the American report affect India?
After the report on unemployment came on Friday, a decline was also seen in the American stock market. Dow Jones fell 600 points on Friday. Now on Monday a decline is being seen in the stock markets all over the world.
In India, Sensex is witnessing a fall of 2000 points and Nifty is witnessing a fall of more than 650 points on Monday. America’s job report is being held responsible for this. That is because due to this report the fear of recession in America has increased. Its effect is visible in the stock market. In fact, whenever there is a sign of weakening of the economy in America, investors start withdrawing their money, due to which the stock market falls. Due to the fall in the American stock market, selling in the Indian market also increases. People start withdrawing their money.
Apart from this, the recession in America also has a direct impact on Indian industries. Especially in those sectors which are dependent on America. Like auto, energy and IT sectors are largely dependent on America. A decline has been seen in the stocks of these sectors.
Another big reason is that the increasing unemployment rate in America and reduction in manufacturing leads to decline in global demand. This has a negative impact on India’s exports, the effect of which is visible in the stock market.