Unemployment stagnated in June
Economic commentary by Jakub Seidler, Chief Economist of the CBA
The share of unemployed persons (according to the methodology of the Ministry of Labour and Social Affairs) fell from 3.62% to 3.61% in June, thus stagnating at 3.6% after rounding, which was in line with analysts' estimates. Traditionally, however, unemployment usually falls by a tenth in June. This year, however - and despite unseasonably warm weather that allowed seasonal work to start earlier - unemployment has fallen more slowly than would be consistent with the traditional trend of earlier years (Chart 1). The seasonally adjusted share of unemployed persons has then been rising slightly since the end of last year, and continued to rise slightly in June. It is up two-tenths of a percent year-over-year and is thus the highest in three years, and, pandemic years aside, since the end of 2017 (Chart 2).
The number of job seekers fell by 1.6 thousand to 272,000 in June. However, the month-on-month decline was smaller than is consistent with the traditional June trend (Chart 3). Subtracting the specific pandemic years of 2020 and 2021, the decline in the number of jobseekers this June is the weakest since 2009, when it rose slightly. Between 2016 and 2019, the average decrease in applicants in June was 8,000. In terms of seasonally adjusted numbers, the number of applicants rose by 1.15% month-on-month (marginally more than in May), the highest month-on-month increase since October 2022. Year-on-year growth strengthened from 8.5% to 9.5%.
June job openings fell 3% month-over-month, and the year-over-year decline intensified from 6.7% to 8.1%. Although the credibility of this statistic is sometimes questioned and the absolute figures themselves should be viewed with some caution, the trend in job vacancies also suggests a slight cooling of the labour market, as seasonally adjusted vacancies have been falling month-on-month since last December.
Although the domestic labor market remains in a state where many employers are struggling to find suitable employees, certain signs of cooling in recent quarters are evident and this trend is likely to continue for the rest of this year. The decline in the share of unemployed persons this year was among the lowest since 2009, outside of pandemic years. According to the CSO leading indicators, firms in industry (especially outside the automotive sector), services (especially the financial services part), and construction are planning to reduce employment in the coming months, while employment in retail trade is expected to grow (Chart 4), which also suggests some cooling of the labour market. On the other hand, the current forecasts of the CBA, the CNB or the Ministry of Finance still expect an increase in the share of unemployed persons this year to 3.8%, which is still lower than what we observed in 2017, when the domestic labour market had already started to face signs of overheating (Chart 5).
