Today’s labour market statistics confirmed the demand for labour in the domestic economy. The share of unemployed dropped to an unexpectedly low 5.1% in February from January’s 5.3%. Such a low February reading was last recorded in 2008. The unemployment of youth and recent graduates is also close to historic lows. Moreover, the number of vacancies has remained high for a number of months.
The number of unemployed registered at labour offices has declined by almost 10,000 in February compared with January. The share of unemployed dropped from 5.3% to 5.1%. Our calculations show that the seasonally adjusted measure decreased even to 4.7%, which is the lowest level since the end of 2008. The positive trend on the labour market is corroborated by the fact that the number of unemployed increased only in two districts. All other districts reported a drop in the figure. Vacancies reported an increase. The ratio of job seekers to vacancies after adjusting for seasonality declined to 2.3. This is the lowest value since August 2008.
We assume that economic activity gained momentum at the beginning of the year, which translates into demand for a labour force. On the other side of the labour market equation lies the weak supply of labour. The labour market’s tightness will remain one of the main economic topics. Unemployment is set to continue decreasing. However, the share of unemployed will not decrease as rapidly as last year, as it has little room for steep declines. Our forecasts show that this year’s bottom will print in June at 4.4%. The lack of an available labour force together with sound economic growth will press on wage growth. The nominal wage is set to increase 4.6% this year. Yet part of the growing purchasing power of households will be consumed by increasing inflation.