Despite a stagnating economy, the labour market has performed very well over the past year. According to the LFS, the employment ratio in October turned above its average and the labour force participation rate reached its highest level since 2001.
In October, employment increased by a full 0.7% over the month and by 1.9% over the year. Also, labour supply increased substantially, which implied that unemployment declined only marginally to 7.9% (seasonally adjusted). Although the unemployment rate is spot on the Riksbank forecast at 7.9% in Q4, the underlying trends in supply and employment have turned out better.
Worth noting is also that the number of hours worked (calendar adjusted) was up 1.0% y/y in Q3 which suggest that GDP grew decently in Q3.
Today’s figures ease some pressure on the Riksbank to cut its repo rate in December. We stick to our forecast that the Riksbank will stay on hold in December, despite the low inflation reading and today’s proposal from the FSA to raise risk weights on mortgage loans further.
Details, October Labour Force Survey
Unemployment, seasonally adj.: 7.9 % (Nordea 7.9%; consensus 8.0%; prior 8.0%)
Unemployment: 7.3% (Nordea 7.3%; consensus 7.3%; prior 7.5 %)
Employment y/y: 90 k people (Nordea 55k; prior 41k)
Labour force y/y: y k people (Nordea 52k; prior 41k)
Nordea