A recent report by Fitch Ratings, an international credit rating agency, indicates that the unemployment rate has risen in several advanced economies. The first half of this year (January-June) saw a noticeable slowdown in the labor markets of these countries. However, central banks have already started taking measures to improve the situation.
Fitch highlights that unemployment rates have increased in the U.S., U.K., Canada, Germany, Australia, and Switzerland. In the U.S., the unemployment rate rose to 4.3% last month, up from 3.5% in the same period in 2023, raising concerns about a potential recession. Similarly, the U.K. saw its unemployment rate rise to 4.2% in May, up from 3.8% in November 2023.
The report also notes that higher interest rates have contributed to the rising unemployment rates. In response, central banks in Europe, the U.K., Switzerland, and Canada have recently lowered interest rates, and further cuts may follow. The U.S. Federal Reserve has also hinted at possible rate cuts, which are already beginning to impact the market.
Despite the rise, Fitch notes that unemployment rates remain below historical averages, and the lack of significant pressure in the job market reduces the likelihood of rapid wage growth. This situation supports central banks in advanced economies in lowering interest rates, a strategy some have already adopted.
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