Glossary · from the DESK dictionary
Unemployment Rate
The share of the labor force actively seeking work but unable to find employment.
In plain words
A central indicator of labor-market — and thus overall economic — health.
In more detail
The unemployment rate is part of the "dual mandate" of many central banks (e.g. the US Federal Reserve), which target both price stability and maximum employment.
Example
An unexpected rise in the US unemployment rate can trigger expectations of rate cuts.
What it means for traders
An important monetary-policy indicator, especially for Fed policy in the US.
Common pitfalls
Can be distorted by structural factors (e.g. labor-force participation) and is a lagging indicator.
Related terms
ADP Employment Report · Central Bank
From the DESK dictionary. For information only, not investment advice.
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