Unemployment fell to 3.6 percent in May
Economic commentary by Jakub Seidler, Chief Economist of the CBA
The share of unemployed persons (according to the methodology of the MLSA) fell from 3.74% to 3.62% in May, which was in line with analysts' estimates. Traditionally, unemployment falls with the arrival of the warmer months as seasonal work begins. However, this year - despite the unseasonably warm weather which has 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 been rising slightly since the end of last year, and continued to increase slightly in May (Chart 2);
The number of jobseekers decreased by 5.8 thousand to 274 thousand in May. However, the month-on-month decline was lower than the traditional May trend (Chart 3). Looking back at the specific pandemic years of 2020 and 2021, the decline in the number of job seekers this May is the weakest since 2009, when it rose slightly. Between 2016 and 2019, the average decrease in the number of applicants in May was 15,000. In terms of seasonally adjusted numbers, the number of applicants rose 1% month-on-month, the highest month-on-month increase since January, and year-on-year growth strengthened from 7% to 8%.
The number of job vacancies fell by 1% month-on-month in May (the average for this year), while the year-on-year decline intensified from 5.8% to 6.7%. 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 labour market is still in a state where many employers are having trouble finding suitable employees, there have been some signs of cooling in recent quarters and this trend is likely to continue for the rest of this year. The decline in the jobless rate this year (March to May) was among the lowest since 2009, outside of pandemic years. According to CSO leading indicators, firms in industry (especially non-automotive), services (especially the financial services part), and construction plan to reduce employment in the coming months (Chart 4). On the other hand, the current forecasts of the CBA, the CNB or the Ministry of Finance still expect the share of unemployed persons to rise to only 3.8% this year, 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);
