Gloomy labour market data
Labour market data has disappointed in the 3rd quarter of 2019. While unemployed stayed flat compared to previous quarter, it was 0.5 percentage point (pp) higher than a year ago. Weakness is observed across most labour market indicators. Number of employed persons has shrunk 1.9% in a year. Employment rate (15-64) is relatively high at 73.2%, but it also did not escape a downward trend and was 0.8pp lower than a year ago. On the other hand, registered unemployment rate in the third quarter was lower than a year ago and sends a contradicting signal about the health of the labour market.
Business surveys and vacancy rates show a somewhat cooling labour market as well. While companies still report relatively high labour shortages, less firms are complaining about hiring in recent months. The trend is also supported by vacancy rates, they have edged downwards, especially in labour intensive industries such as administrative activities, transportation and construction.
Outlook: Stable unemployment
The relative weakness of the newest labour data is quite curious given the fast, albeit slowing, economic expansion and high economic confidence. We forecast unemployment to be around 6.2% next year and 6% in 2021.
Domestic demand is projected to remain strong and support employment, on the other hand persistent weakness in external demand could dampen employment in export-oriented sectors such as transportation and manufacturing.
Overall labour market should be monitored very closely in the nearest future as it could be sending a signal of inflection point in the business cycle. However, currently labour market data is in dissonance with overall economic activity indicators.
For more information about this report, please contact:
Vytenis Šimkus, +370 687 17870, email@example.com.
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