One of the most relevant data economic It is the one that refers to work activity. To the extent that it can influence the future of companies listed on equity markets. Not under great intensity, but at least so that you have one more parameter to make your decisions investment from now on. Especially, in sectors such as financial groups, banks and those with greater ties to the interests of the State. Not surprisingly, based on unemployment data, governments choose one or another strategy in their economic policy. This is where these unemployment data are most important.
From this source of analysis, financial markets are not usually supportive of high unemployment figures. But rather the opposite, they can be the basis to sustain a rise in the stock indices. On the other hand, you cannot forget that the reduction of workforce in listed companies is usually greeted by wide climbs in stock prices. This is a completely generalized action in all of them since they fundamentally want to continue growing in their business accounts. Unfortunately, the human factor does not count as financial markets do not understand feelings.
However, in other situations as well, equity markets celebrate unemployment figures with new vigor. Especially when there are significant changes. Above all because of its impact on society and the economy in general. For a very clear reason and that is because there are more people in the work activity at the end affects consumption. And this factor is always well received by the financial markets. Whether in the national stock market or outside our borders. In this sense, one of the most anticipated data by investors comes from the United States and is the one that refers to weekly unemployment claims. To the point that its influence on the stock market is very important.
Improvement in employment in 2017
The latest data provided by the Labor Force Survey (EPA) carried out by the National Institute of Statistics (INE) highlights the job recovery in Spain during the past year. When verifying in its report that the number of employed increased by 235.900 people in the third quarter of 2017 and stood at 19.049.200, the highest figure since the third quarter of 2009. The quarterly variation rate of employment is 1,25, 16%. The employment rate (percentage of employed persons with respect to the population aged 49,27 and over) stands at 57%, which represents an increase of 1,2 hundredths compared to the previous quarter. In annual variation, this rate has risen XNUMX points.
By sex, employment increased this quarter by 163.600 for men and 72.300 for women. By nationality, employment grew by 196.600 people among Spaniards and 39.300 among foreigners. By age, the greatest increases in employment this quarter were observed among people aged 20 to 24 (101.000), in the group aged 55 and over (39.800) and in those aged 16 to 19 (36.900). On the other hand, in the group between 30 and 34 years of age, the number of employed persons decreased by 12.400. In the last 12 months, employment has increased by 521.700 people (307.700 men and 213.900 women). The rate of annual variation of occupancy is 2,82%, which represents a rise of two hundredths compared to the previous quarter.
The service sector at the fore
The Active Population Survey also emphasizes that last year it was the service sector that gave the most jobs in all the autonomous communities. It is clear that the number of employed persons increases this quarter in the services (236.400 more), in Industry (34.100) and in Construction (21.000) and decreased in Agriculture (55.500 less). In the last year, employment has risen in all sectors: in Services there are 301.700 more employed persons, in Industry 139.400, in Construction 47.400 and in Agriculture 33.200.
Regarding full-time employment, it increased by 380.200 people, according to the EPA report, while the number of part-time employed decreased by 144.300. The percentage of employed people who work part-time decreases 95 hundredths, up to 14,31%. In the last 12 months, full-time employment has increased by 493.000 people and part-time employment by 28.700.
More number of employees
The number of wage earners grew this quarter by 216.400. Those with a permanent contract increased by 67.500 and those with a temporary contract by 148.900. The temporary employment rate rises 57 hundredths, to 27,38%. In the last 12 months the number of employees has increased by 502.000. Permanent employment has increased by 299.300 people and temporary employment by 202.700. The total number of self-employed workers grew by 21.000 people in quarterly variation. Private employment increased this quarter by 177.600 people, standing at 15.987.200. Public employment does it at 58.300, up to 3.062.100.
By sex, the number of unemployed men is reduced by 90.700 this quarter, standing at 1.810.700. Among women, unemployment fell by 91.900, to 1.921.100. The female unemployment rate decreased 84 hundredths and stood at 18,21%, while the male rate decreased by 83 hundredths and stood at 14,80%. By age, the decrease in unemployment this quarter is concentrated in the 25-54 age bracket (159.800 fewer unemployed persons). For its part, the number of unemployed rose by 9.200 among people between 16 and 19 years of age. By nationality, unemployment decreased by 160.900 people among Spaniards and by 21.700 among foreigners. The unemployment rate of the Spanish population is 15,52%, while that of the foreign population is 22,70%.
Incidence of unemployment on the stock market
As we mentioned earlier, the link between unemployment and equity markets is not very direct. But on the contrary, it appears because of the repercussions it has on other aspects of the economy in general. One of these stems from the impact it can have on economic growth. This is a piece of information that publicly traded companies are more prone to. Since generally low unemployment rates correspond to periods expansive of the economy. Where the rises in the markets is the common denominator in most indices.
On the other hand, it is also reflected in the role that the inflation. The consumer price index is a variable on which all the world's stock markets are pending. To the point that it is decisive for them to go up or down and in this way you are in a better position to make the savings profitable under greater efficiency. The reaction is immediate to each data that is coming out to the financial markets. Not in vain, you will always have to be very vigilant if your desire is to open positions in equities. Above other economic data of special relevance.
Linking unemployment to households
Referring again to the Labor Force Survey carried out by the National Institute of Statistics, it provides another interesting piece of information with respect to last year. It is none other than the number of households increases by 10.100 this quarter and stands at 18.515.300. Of these, 4.729.200 are sole proprietorships. Households that have all their active members unemployed decreased this quarter by 83.700, to a total of 1.193.900. Of these, 309.300 are sole proprietorships.
For its part, the number of households in which all its active members are employed increased by 134.100, to 10.235.300. 1.900.500 of them are sole proprietorships. In an annual comparison, the number of households with at least one asset in which all the assets are unemployed has decreased by 244.400, while those with all their assets employed has grown by 412.300. In annual variation, the largest increases in occupancy were observed in Andalusia (111.200 more), Comunidad de Madrid (109.400) and Catalonia (92.700). On the other hand, the greatest drop in the number of employed persons was in Castilla y León (6.100 less).
Direct relationship with the stock market
Another aspect that you must take into account from now on is that there is no company that collects these derived data on the level of employment in its quotes. In this sense, it can be said that it is not an asset that is traded like other economic parameters. As for example, the arrival of visitors, the increase in living costs or the debt levels of a country. To the point that there can be upward movements in equities in periods of high unemployment. Not surprisingly, very few financial agents look at this variable for make your decisions, in one sense or another. If not, on the contrary, what is considered in the financial markets as a neutral data. If hardly any impact on the quotes.
There is no direct relationship on which more unemployment leads to more vertical rises in equities. But in any case it is a parameter that helps to improve the profit margins of companies. Although under a very little appreciable intensity and that is hardly reflected in the value of the prices. Although it is always good that you take it into account to operate in the equity markets.