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Index IDEA: Market Performance in Sub 5% Unemployment

Index IDEA: Examining US & UK Market Performance in Sub 5% Unemployment Periods

With the US recently reaching a milestone 4.9% unemployment rate, and many market participants anticipating that the UK may report a similar milestone in the near future, FTSE Russell examined how indexes tracking US and UK markets fared during the rare extended periods of sub-5% unemployment in the last 20 years in these two markets.

  • The US unemployment rate hit 4.9% in July 1997, staying below 5% until September 2001. During this time, the Russell 3000® Index, measuring the US equity market, rose by 7.5%. During the next extended period of sub-5% unemployment for the US, from December 2005 through November 2007, the Index rose by 12.3%.

  • The UK unemployment rate last dipped below 5% in November 2003, staying under 5% until October 2005. During this time, the FTSE All Share Index,  measuring the UK equity market, rose by 24.1%.

Source: FTSE Russell.Past performance is no guarantee of future results. Please see the end for important legal disclosures.

Gareth Parker, Senior Director, Index Research & Analytics, FTSE Russell:

“Historical analysis demonstrates that, while past performance is no guarantee of future results and periods of extended sub-5% unemployment rates in the UK and the US are rare, US & UK market indexes have experienced positive returns during these periods in the last 20 years. This is just an additional point of information which may prove interesting to market participants as they analyse the current market environment.”

 

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