The unemployment rate, measured by the labour force methodology for the 15-74 age group, declined by 1.7pps y/y to 4.5% in November, the statistical office (KSH) reported. The unemployment rate was down by 0.2pps m/m and reached a new record low, driven by continued expansion of employment. The number of unemployed fell by 26.9% y/y to 207,500 people, in our opinion pointing to a continued tightening of the labour market. Economy minister Mihaly Varga had earlier estimated the natural rate of unemployment at 3% but we consider this rather as a target rate since wage pressures and labour shortages should mean little reserves to meet the rising labour demand without additional measures.
Youth unemployment also fell considerably, down by 3.3pps y/y to 11.8%. The reduction of youth unemployment was likely supported by the government’s continuing job protection programme, in our view. Youth unemployment still accounted for around 20% of the total unemployment, the KSH said. The average duration of unemployed was 18.1 months and the share of long-term unemployment remained relatively high at 46.3%.
Total employment rose by 3.3% y/y in November. It picked up slightly compared to the 3.2% y/y growth in the previous period but employment growth has generally followed a flat trend in the past few months. Earlier data showed that labour demand was mainly driven by the private sector while the public work programme started to have a slightly negative contribution to growth. The domestic primary labour market created 152,600 new jobs in the past twelve months while employment in the public sector was down by 15,900 people, in our view due to the contraction of the public work scheme.