Small growth of unemployment in Czech Republic in January

The share of unemployed people aged 15-64 rose to 6.4% in January from 6.2% in December staying slightly below the consensus forecast of 6.5%, data released by the Czech labor ministry on Monday showed. The number of registered unemployed rose by 30,856, or 7.1% m/m, to 467,403 in January. However the number of jobless people was by 88,788, or 16.0%, lower than in January 2014 and the share of unemployed has declined by 1.3pps from a year ago when it stood at 7.7%. On the positive side, the number of vacancies rose in both monthly and annual terms by 5.1% and 73.1%, respectively, reaching 107,779. Some 4.3 job seekers competed for one job in January.

January unemployment rate is in line with the usually seasonal pattern when the expiration of seasonal jobs in construction, agriculture and tourism sectors and the staff reduction enforced at the end of the previous year usually affect the number. Still the print was better than expected by the market while the continuous rise of number of vacancies bodes well for the near-term outlook. The economic growth will continue to create new jobs so the annual comparison will remain favorable. Still the decline in the unemployment rate is likely to moderate as economy approaches its capacity. All that said, the low unemployment and the strong household sentiment keep outlook on household consumption on the upside for 2016 as well. We recall that data released by the Czech stats office last week showed the survey-based unemployment rate fell to 4.5% in Q4 from 4.9% in Q3, thus hitting its eight-year minimum.

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