Unemployment rates have been edging upward in the past six months in a number of large developed economies, as highlighted in Fitch Ratings’ latest ‘20/20 Vision’ chart pack.

Unemployment remains low by historical standards, but easing labour market conditions are starting to take some pressure off wage inflation. This is helping central banks in advanced economies justify interest rate cuts, which are now gathering pace.

Unemployment rates have been increasing in the US, UK, Canada, Germany, Australia and Switzerland.

In the US, the unemployment rate rose to 4.3% in July 2024 from 3.5% a year earlier; in the UK, it rose to 4.2% in May from 3.8% in November 2023.

Also, in Canada, it rose to 6.4% in July from 5.0% in January 2023; in Germany it was at 3.4% in June from 2.9% in May 2023; in Australia, it rose to 4.2% in July from 3.5% in June 2023; in Switzerland, it increased to 2.5% in July 2024 from 2.0% in June 2023, Fitch said.

The ECB, Bank of England, Swiss National Bank and the Bank of Canada have all cut rates in the last two to three months and US 10-year yields have fallen in anticipation of Federal Reserve rate cuts in the near future.

The People’s Bank of China cut its 1-year medium-term lending facility rate (MTLF) in July by 20bp – to 2.3% – and China’s 10-year government bond yields have fallen. Banco de Mexico also recently reduced its policy rates.

By contrast, the Bank of Japan increased its uncollateralised overnight call rate from the range of 0.0%-0.1% to “around 0.25%” and the Central Bank of Russian Federation raised its policy rate by 200bp, to 18% amid accelerating CPI inflation that in July reached 9.1%.