August 01, 2022
(reading time: 2 mins)
Summing up, the job market is smoothly adjusting, from Feb/March highs, however has been a small adjustment, the unemployment rate is just 30bp higher at 6.1%, from a February recent record low. Is fair to assume, higher unemployment rates in the coming futures, as higher interest rates and prices should continue to dent confidence; however is premature to advocate an harsh adjustment.
The INE (Portuguese Statistic Institute) released Friday Jnue’s job market figures, namely rate of unemployment, Under utilization rate, Employed population and Underutilization population.
The main highlights are the following:
1. The unemployment rate in June increased sequentially 8bp to 6.07% vs. 12MMA (12 month moving average): 6.11% and 3MMA 6.00%;
2. The Under-utilization rate (takes in consideration the under-utilization population divided by a broad concept of Active population) increased also MoM 9bp to 11.59% vs. 12MMA: 11.72% and 3MMA: 11.52%;
3. The under-utilization population (unemployed population + underemployed population + inactive population looking for a job but not available + inactive population available but not looking for a job) went down 7.8%YoY vs. 12MMA: -14.72% and 3MMA: -9.47% (sequentially: +49bp);
4. The Inactive population went down 1.0%YoY vs. 12MMA: -4.52% and 3MMA: -2.74% (sequentially: +54bp);
5. The employed population went up 0.8%YoY vs. 12MMA 3.63% and 3MMA +2.0% (sequentially: -11bp).
Our comments: the labour market reached its top and is slowly adjusting from February/March highs. Important to highlight data was reviewed slightly downwards, so in fact the job market despite an adjustment, remains strong. The unemployment rate is now 30bp higher than February recent record low, the same is true regarding the broad concept, under-utilization rate: +30bp since February lows, while the Employed population is slowly coming down for three months in a row. Seems fair to assume, this trend, smoothly higher unemployment rate, will continue in the coming months, as higher prices, namely food and energy prices and higher interest rates will dent confidence. However, seems premature to defend an huge adjustment in the economy. From our understanding, inflation and interest rates are two key variables, once inflation stabilizes, ECB’s monetary policy should be less of a concern.
Summing up, the job market is smoothly adjusting, from Feb/March highs, however has been a small adjustment, the unemployment rate is just 30bp higher at 6.1%, from a February recent record low. Is fair to assume, higher unemployment rates in the coming futures, as higher interest rates and prices should continue to dent confidence; however is premature to advocate an harsh adjustment.
Source: INE, AS Independent Research
António Seladas, CFA
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