The registered unemployment rate fell by 2.2% y/y to 10.3% at end-January, according to the preliminary stats office data. The print was however by 0.7pps higher than that reported in December, which was not surprising given the low seasonal job activity during the month, in our view. On the downside, the unemployment rate returned to two-digit territory after eight straight months despite local businesses’ persistent complaints of labor shortages. Demand for new workers remains high, but structural issues, including lack of sufficiently qualified workers, have been weighing on the labor market improvement. The highest workforce shortages are usually most visible in the ICT, construction, tourism and shipbuilding sectors. High emigration also remains problematic for the labor market in the country. In addition, restructuring programs of ailing shipbuilder Uljanik and of oil company’s INA refinery in Sisak may also have a negative effect on the jobless rate. Nevertheless, we expect that the unemployment rate will fall again to one-digit territory as of next months with the start of the new active touristic and agricultural season.
The number of unemployed people went down by 18.7% y/y in January, easing from the 20.5% y/y drop in December, to 158,834. On monthly basis, their number actually rose by 6.7% y/y, at an accelerating pace from the previous month. The number of employed people posted 1.1% y/y growth to 1.386 million in January, easing from the 4.5% y/y growth in December. The sectoral breakdown showed that the number of employed in transportation, tourism, professional activities, administrative and support services rose the most y/y. On the downside, the number of employed in the electricity and gas supply fell the most y/y.