The registered unemployment rate fell down to 6.1% at end-May, from 6.3% at end-April, according to the latest figures of the state employment agency. In annual terms, the number of the unemployed dropped by 5.8% y/y, while in monthly terms fell by 3.6% m/m. Meanwhile, the number of job vacancies continued to increase, higher by as much as 72.2% y/y, signaling for strong labor demand and shortages. The unemployed per vacancy ratio remained unchanged in monthly terms at 1.7, still at its record-low level. In the meantime, the number of the employed dropped by 0.9% y/y, according to our estimations, while the labor force shrank by 0.6% y/y, our calculations showed.
All in all, labor demand remains strong amid still robust economic activity. Latvia continues to experience labor shortages and as argued by the finance ministry earlier this year, the labor market poses a challenge to growth as wage growth could negatively affect the country’s competitiveness. Looking ahead, we expect that the unemployment rate might drop down further at end-Q2 and Q3, driven by seasonal job opportunities.