Labor hoarding in CEE lower than in the Eurozone
|On the radar
-
In Slovenia, industrial production grew 3.5% y/y in October.
-
In Romania, November’s inflation landed at 5.1% y/y.
-
Otherwise, there are no other releases scheduled for today.
Economic developments
Labor hoarding, coupled with structural and persistent low growth, could eventually result in increased unemployment, according to the European Stability Mechanism (ESM). It could further undermine resilience and impact the economy, public finances, and financial stability. The ESM’s analysis suggests that labor hoarding is keeping the current unemployment rate about two percentage points higher in the Eurozone. In the region, however, labor hoarding seems to be less of an issue. The Labor Hoarding Indicator (LHI) of the European Commission measures the percentage of managers expecting their firm’s output to decrease, but employment to remain stable or increase. The LHI was at 10.1 percent, while the average for CEE7 was at 7.2 percent. Looking across the countries, labor hoarding is the highest in Hungary, where the November’s value was at 15.3 percent (visibly above the Eurozone). In other countries, labor hoarding holds between 5 and 8 percent and has been declining lately.
Market developments
The CEE currencies have been strengthening against the euro since the beginning of the week with the EURHUF moving down to as low as 410. On the bond market, the long-term yields have been lower ahead of the ECB meeting (rate decision due Thursday). In Czechia, central banker Kubicek expressed his concerns that the central bank may not manage to bring disinflation to the finish line. He thus supports cautiousness as core inflation, that is in his focus, shows little prospects of slowing below 2% from the current 2.4%. Romanian pro-European parties pledged to form government quickly and it is likely they will support one joint presidential candidate in the new presidential elections. Polish president signed the law that freezes the 2025 electricity prices.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.