Today from the Czech point of view belonged to labour market figures for August. The market had expected the unemployment rate to stagnate during the second holiday month. This was confirmed. The unemployment rate held steady at July's level of 3.8 % during August.
It has been confirmed that there are simply no major recruitment events during the summer holidays. In addition, uncertainty continues to reign in the industry, which in itself hampers the willingness to recruit. The unemployment rate could not fall either because another batch of this year's high school and university graduates arrived at the labour offices.
In terms of numbers, at the end of August the employment offices reported 286 320 jobseekers. Their number was 3 309 higher than at the end of the previous month. In contrast, the authorities offered 263 247 vacancies. Their number increased slightly month-on-month - specifically by 1,221 jobs. The number of applicants per vacancy remained at 1.1 this time. This situation has been going on for nine months and should continue. In other words, the labour market is no longer as tight as it has been in recent years.
The downward trend in the unemployment rate is behind us for this year. This trend peaked at the beginning of the summer at 3.6 %. At that time, outdoor work was in full swing. In the months ahead, it is the ending of seasonal jobs that will contribute to a pullback in the unemployment rate. Towards the end of the year, unemployment will jump to 4 %.
In the sum of the whole year 2024, we should see a very slight increase in the unemployment rate compared to 2023, when unemployment reached 3.6 %. The continued decline in industrial production will eventually contribute to lay-offs in the part of businesses that continue to wait in vain for new orders. On the other hand, a number of construction firms continue to look for labour. Specifically, we expect unemployment to average 3.8 % in 2024. The economy has enough problems, but unemployment is not one of them - on the contrary, these figures are very good.
The koruna virtually did not react to today's statistics. During the afternoon, the koruna weakened only slightly to CZK 25.05/EUR. Investors are clear that the labour market statistics will not force the Czech central bankers to change their plans. In our view, everything is pointing towards another 25 basis point cut in the Czech National Bank's interest rates. This will also be confirmed by tomorrow's consumer inflation statistics, in our view. Its pace should slow back to the 2% level.
The dollar continued its gradual strengthening today. It reached the level of 1.104 USD/EUR. The new week will have two peaks in terms of the USD/EUR currency pair. The first one will be the US consumer inflation figures. Its annual pace is expected to slow down from 2.9 % to 2.6 %. Such a clear weakening in the pace of inflation should confirm that the US Fed is one step away from the beginning of the rate cut cycle. In the Eurozone, the highlight of the week will be the European Central Bank meeting. We expect the latter to cut its interest rates by 25 basis points after a short break. What does this mean for the dollar-euro exchange rate? In the end, nothing will change the fact that the dollar should continue its gradual retraction of August losses.
While the PX index of the Prague Stock Exchange wrote off 0.4 % today, the Slovak stock index SAX stagnated.
Jiří Cihlář, Markéta Šichtařová
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