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ASX 200 Sent Into Negative Territory By Rising Unemployment Rate

The ASX 200 (ASX:XJO) index has been sent into negative territory with the release of the latest job numbers. 

The ASX 200 (ASX: XJO) index has been sent into negative territory with the release of the latest job numbers.

According to the statistics produced by the Australian Bureau of Statistics (ABS) the unemployment rate has increased to 5%, up from the previous multi-year low of 4.9%.

However, although the unemployment rate did increase, so did the number of people who are employed. Around 25,700 jobs were added, against the projected 15,000 that economists were expecting.

The numbers were even better when you look a bit closer. The number of full time people who are employed increased by 48,300, although the part time employees decreased by 22,600.

The number of unemployed people also increased by 17,100 and the participation rate increased by 0.1% to 65.7%. Monthly hours worked in all jobs increased 13.2 million hours to 1.785 million hours.

The ‘underemployment’ and ‘under-utilisation’ rates, being the amount of people not working as much as they could work, increased 0.1% to 8.2% and 0.2% to 13.2% respectively.

What Does This Mean?

The employment rate is key for a variety of reasons. People remaining employed helps the loans continue to be paid to banks like Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB).

It means people have the money to go shopping at Woolworths Group Ltd (ASX: WOW), Wesfarmers Ltd (ASX: WES), JB Hi-Fi Limited (ASX: JBH) and other stores. They will keep travelling on Transurban Group (ASX: TCL) roads or flying through Sydney Airport Holdings Pty Ltd (ASX: SYD).

If people are employed they will likely be generating GDP for Australia, tax dollars for the Australian budget and generally making the money go round the economy.

A rising unemployment rate would mean more unemployment benefits paid by the government, less money being spent in the economy and the Australian households having lower confidence.

ABS Labour Statistics Program Manager Bjorn Jarvis said: “In trend terms, we’ve now seen the unemployment rate at 5.0 per cent for five months and the participation rate holding steady at 65.6 per cent.

The 5% unemployment rate is still a very good rate, hopefully it doesn’t tick higher. Either way, I’d want to own some of the proven and reliable ASX shares mentioned in the free report below.

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