Hungarian Labour Market Metrics Improve Even More

Even though the March unemployment rate decreased in Hungary despite the new lockdown measures, we believe we're going to see a negative impact from the labour market on GDP growth in 1Q21.

The February labour market data for Hungary caused an upside surprise. Despite our expectation of a deterioration in March on the back of new lockdown measures, almost all labour market metrics improved.

The unemployment rate came in at 4% in March, 0.4 percentage points lower than a month ago, but still 0.5ppt higher than in March 2020. During the first quarter of 2021, the official unemployment rate was 4.5% on average, increasing compared to 4Q20.

The latest lockdowns haven’t shown up (fully) in the unemployment numbers, but there is usually a two-month lag in the data. Our hunch is strengthened by the fact that based on the National Employment Service data; the number of registered jobseekers increased by 0.5% MoM to 304,000.

Labour market trends (%)

Source: HCSO, ING 

The government has started to gradually reopen the economy in April, translating into a further improvement in employment statistics, covering the impact of the third wave lockdowns. However, new lay-offs will not necessarily appear in the official unemployment statistics, neither do the increased workload.

The reason is simple: the majority of workers in the services sector were underemployed. This means that this type of labour force was already counted in the employment statistics. Moreover, there could be many workers who were inactive wanting to work but unable to start work within two weeks.

People in these categories are seen as inactive, and if they join the labour force, it will increase the number of employed people but won’t improve the unemployment statistics.

Potential labour reserves within the 15-74 age group ('000)

Source: HCSO, ING
March 2021 data is ING estimation, as the HCSO hasn't disclosed the detailed data. 

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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

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