The unemployment rate remained unchanged in monthly terms at 6.7% in February, according to the latest figures of the state employment agency. In annual terms, the number of the unemployed continued to decline, down by 4.3% y/y, signaling for strong labor demand. In the meantime, the number of the employed increased by 1.0% y/y, our calculations showed. This happened amid a labor force expansion of 0.6% y/y, according to our estimations.
All in all, labor demand in Latvia remains solid, supported by robust economic activity and we expect that employment growth should continue to support household consumption. To remind, the welfare ministry argued earlier this year that the average unemployment level is expected at approximately 5.9% in 2019 and reminded that a further decline in the jobless rate is expected in Q2 and Q3, due to a higher number of job opportunities. It is also worth noting the country continues to experience labor shortages and according to the finance ministry the labor market poses a challenge to growth as wages are expected to continue rising, which could negatively affect the country’s competitiveness in the longer term.