The registered unemployment rate eased from 2.7% in September to 2.6% in October, in line with expectations, according to figures of the labor ministry. In annual terms, the unemployment rate fell by 0.2pps, down to just above its historical low from June. The decline came despite further deceleration of the rate at which job seekers decreased, at 8.9% y/y in October, down to an almost 5-year low. The same was seen with job vacancies, which grew by 6.5% y/y in October, a 5.5-year low. Even then, job seekers covered only 58% of available vacancies, which is close to the historical low.
Newly registered job seekers fell by 4.8% y/y in October, in contrast to the 8% y/y hike seen in September, but we believe it was due to some time lag, like between the moment when people graduate from school and the moment they start looking for work. It is why we consider the boost in September and respectively in Q3’19, according to the labor force survey, as misleading. On a less positive note, the number of job seekers who found a new job fell by 7.5% y/y, though it can be argued it was because of lower job seekers in the first place. There was still a very strong activity of state employment bureaus, as the number of people who found a job through them jumped 45.3% y/y.
Meanwhile, the number of newly announced vacancies kept falling, down by 14.5% y/y in October, which is in line with lower demand in certain economy sectors, particularly industry. On a negative note, the number of filled-in positions fell by 9.6% y/y, which hasn’t happened since 2012, though we believe it reflects labor shortages above anything else. There was also a strong increase in newly vacated positions, regardless whether it is due to changing jobs or retirement, illustrating that turnover remains considerable, making it even harder for employers to find needed personnel.
Overall, the data show yet again that the labor market remains tighter than ever. While there are some signs that certain sectors are dialing down new employment, the overall picture remains unchanged. We haven’t expected anything else, given how acute labor shortages have become. As economic activity eases, there will be some readjustment, but we don’t expect unemployment rising quickly. What may happen before that is wage growth to start easing, because employers will have more arguments against big wage hikes when activity and orders are lower.