There is a decline in the stock market across the world. There was a decline in the stock market in India too. Sensex and Nifty crashed as soon as the market opened on Monday. There was a decline of 7.3% in Japan, 7.7% in Taiwan and 6.6% in South Korea.
What is the reason for such a huge fall in the stock market around the world? Actually, the US jobs data is being held responsible for this. On Friday, the US released data on jobs. It was revealed that the unemployment rate in the US is continuously increasing. This has raised the fear of recession in the US.
This jobs data from America has created a stir across the world. Questions are being raised whether the world’s largest economy is going to be hit by recession?
What does US jobs data say?
Last Friday, the US Bureau of Labor Statistics released data on jobs. It said that only 1.14 lakh people got jobs in July. Whereas, till now an average of 2.15 lakh jobs were created 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 in July was the highest since October 2021.
Statistics show that the unemployment rate among men was 4% and among women it was 3.8%. The highest unemployment rate was among blacks and African-Americans. The unemployment rate among blacks and African-Americans was 6.3%, while in July 2023 it was 5.7%.
These figures raised concerns
– The unemployment rate rose by 0.2% to 4.3% in July. 3.52 lakh people became unemployed this month. A total of 72 lakh people were unemployed in the US till July.
– Among the unemployed, there are about 11 lakh people who have been temporarily fired from their jobs. That is, they can be re-employed later. Whereas, there are 17 lakh people who have been permanently fired by the companies.
– The number of long-term unemployed in America has also increased by more than three lakhs 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 was around 12 lakhs.
Not only this, the average earnings of people have also fallen slightly in a month. In June, the average weekly earnings of a person was $1,200.16. In July, it fell slightly to $1,199.39.
Why fear a recession?
The unemployment figures released by the US government in July have raised fears of a recession. There is a rule in the US about recession. This rule was made by former economist Claudia Sam. This rule says that if the unemployment rate increases by even half a point from last year’s low for three consecutive months, then it should be assumed that a recession has arrived.
Statistics show that the unemployment rate in America has been rising for five consecutive months. The unemployment rate was 3.8% in March, which rose to 4.3% in July.
Not only this, in July in America, companies laid off about 2.5 lakh people. Last year also, big tech companies like Apple, Microsoft and Google laid off about two lakh people.
There are signs of recession in America. However, some experts believe that 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 dismissed the possibility of recession. He says that there are no signs of recession right now. 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 have an impact on India?
After the unemployment report came out on Friday, the US stock market also saw a decline. On Friday, the Dow Jones fell by 600 points. Now on Monday, a decline is being seen in stock markets all over the world.
In India, on Monday, Sensex is seeing a fall of more than 2000 points and Nifty is seeing a fall of more than 650 points. The US job report is being held responsible for this. That is because due to this report, the possibility of recession in America has increased. Its effect is visible in the stock market. Actually, whenever there is a sign of the economy weakening in America, investors start withdrawing their money, due to which the stock market falls. Due to the fall in the US stock market, selling increases in the Indian market as well. People start withdrawing their money.
Apart from this, the recession in America also has a direct impact on Indian industries. Especially those sectors which are dependent on America. For example, auto, energy and IT sectors are largely dependent on America. A decline has been seen in the stocks of these sectors.
Another major reason is that the rising unemployment rate in America and the decrease in manufacturing lead to a fall in global demand. This has a bad impact on India’s exports, the effect of which is visible in the stock market.
Source (PTI) (NDTV) (HINDUSTANTIMES)