Unemployment rate rises marginally to 6% in Lithuania

The LFS unemployment rate rose marginally by 0.1pp q/q to 6% in Q4 and has thus remained basically unchanged for 3 quarters in a row, the stat office reported on Friday. For the entire 2018, the unemployment rate has thus declined to 6.2%, down from 7.1% in 2017. The labor market has surprised on the upside in 2018 as employment increased by an average of 1% amid expectations of a small decline. Employment growth even continued to accelerate in Q4, rising by 1.8% y/y amid falling number of inactive people and rising labor force. The increase in the labor force has been the result of rising immigration and the entering of more young and elderly people in the labor market, likely stimulated by the strong wage growth.

The strongly performing labor market will further support domestic demand in 2019, in our view. Our expectations are that the unemployment rate will remain close to 6% while employment growth should ease somewhat given that overall economic growth is projected to ease mostly on the back of external factors.

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