Hungary: Unemployment rate falls by 0.3pps y/y to 3.5% in April

The unemployment rate, measured by the labour force methodology for the 15-74 age group, dropped by 0.3pps y/y to 3.5% in April, the statistical office (KSH) reported. It was also down by 0.1pps and reached a new record low. We see the data as generally confirming the ongoing trend for labour market tightening and while the economy does appear to have some further labour reserves, the risk of overheating increases, in our view. Labour supply continued to expand, rising by 0.7% y/y due to further increase in labour force participation. Net of the public work scheme, the unemployment rate was 6.0% in April and dropped by 1.2pps y/y, according to our calculations based on the KSH data.

There were 162,400 unemployed people in April and their number declined by 8.2% y/y. The average duration of unemployment was 14.0x months and the share of long-term unemployed was 36.8%.

The decline in the number of unemployed was on account of continued growth in labour demand. Total employment rose by 1.1% y/y in April although it slowed down compared to the previous period. The slowdown was on account of the domestic primary labour market, which we think supports earlier data on registered unemployment in suggesting some moderation in economic activity. Employment by local units abroad continued to recover, rising by 18.8% y/y while the public work scheme contracted by 25.5% y/y during the period.

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