France: stand-out labour market performance in 2019

Employment and unemployment figures for Q4 2019 and the year as a whole in France were surprisingly strong, especially since growth weakened markedly, despite showing some resilience. The preliminary Q4 2019 growth estimate fell well short of expectations (GDP contraction of 0.1% q/q), but private payroll employment (up 0.2% q/q, preliminary estimate) and the unemployment rate (-0.4 points to 8.1%) were far better than expected.

Growth averaged 1.3% over 2019 as a whole – nearly a half-point lower than in 2018. Conversely, private payroll employment barely lost any traction (up 1.1% after a 1.2% rise), and the drop in the unemployment rate was slightly larger in 2019 than it was in 2018 (-0.6 points to 8.4%, after a 0.4-point decline in 2018). The labour market’s strong showing, broadly consistent with resilient growth, has also gained succour from the slower increase in the labour force, the structural downtrend in labour productivity gains and measures to ensure growth creates more jobs.

In 2020, we expect the same causes to produce the same effects. Based on a forecast of a minor weakening in growth, we expect only a moderate easing in the pace at which employment rises and unemployment falls. However, this forecast carries a downside risk linked to the economic impact of the coronavirus outbreak. The target of an unemployment rate of 7% in 2022 is achievable, but it is based on an ambitious assumption of growth holding up fairly significantly above 1%.

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