By Joe Cash
In a recent report, China's statistics bureau revealed that the jobless rate for 16- to 24-year olds in China, excluding students, rose to 17.1% in July from 13.2% in the prior month. This increase comes amidst a string of dismal indicators for July, leading analysts to believe that the world's No.2 economy is heading towards a period of prolonged sluggishness.
With around 12 million students graduating this summer, the job market is becoming increasingly competitive, even in remote rural areas. This has resulted in aspiring professionals facing the toughest job market in years.
It is worth noting that youth unemployment hit a record high of 21.3% in June last year, prompting China to halt publication of the closely watched benchmark. The July figure marks the highest rate since December 2023 when officials changed the methodology.
On the bright side, the services sector saw an increase in employment, with the Caixin/S&P Global services purchasing managers' index survey showing the fastest pace in 11 months. This offers some optimism amidst concerns of a job crisis among the youth impacting the economic leadership of the ruling Communist Party.
Analysis:
The increase in youth unemployment in China is a concerning trend that reflects a larger economic slowdown in the country. As more young professionals struggle to find employment, it can have ripple effects on consumer confidence, spending patterns, and overall economic growth. Investors should keep a close eye on these developments as they could impact investment decisions in Chinese markets and beyond. Additionally, policymakers may need to implement targeted measures to address the rising youth unemployment rate and stimulate economic growth.