Unemployment fell below 4 percent in March
Economic commentary by Jakub Seidler, Chief Economist of the CBA
The share of unemployed persons (according to the methodology of the MLSA) fell from 4.0% to 3.9% in March, which fell short of analysts' expectations of a decline to 3.8%. Traditionally, unemployment starts to fall in March as seasonal work starts, and this year's decline was expected to be all the more noticeable due to the above-normal warm weather, which allowed seasonal work to start earlier. Despite this, the proportion of unemployed persons fell only very slightly and less than is consistent with traditional seasonality (Chart 1). This, in turn, led to the seasonally-adjusted share of unemployed persons rising - albeit cosmetically - and has been rising slightly since last November (Chart 2).
The number of job seekers fell by 7,500 in March. However, this is also lower than the traditional March figure and, especially in the context of the warm weather, is even lower (Chart 3). Looking back at the specific pandemic years of 2020 and 2021, this March's decline in the number of job seekers is the lowest since the crisis year of 2013, when it reached just under 6,000. Thus, in seasonally adjusted terms, the number of job seekers is up by less than 1% month-on-month.
While the domestic labour market remains in a state where many employers are struggling to find suitable employees, there have been some signs of cooling in recent quarters and this trend is likely to continue this year. This is indicated, for example, by leading indicators where respondents in both industry and services expect employment to fall in the coming months (Chart 4). The share of unemployed persons in Q1 also fell short of the estimate in the CNB's winter forecast (3.9% vs. 3.7%), confirming that the labour market is slightly behind economists' expectations at the start of the year. However, despite the poor economic development and the mild recession last year, the domestic labour market has remained in good shape and the expected increase in the share of unemployed persons for this year is so far only very moderate (3.8 in the CBA forecast, 4% in the CNB forecast) compared to 3.6% last year. This is also still below the level of 2017, when the domestic labour market was already showing signs of overheating (Chart 5).
