Posted by: Michèlle Elbers Posted on: Wednesday 16 June 2010, 11:38

Hungary’s rate of unemployment ticked further up to a record high of 11.8% in the first quarter of 2010 from 11.4% in the previous three-month period, the Central Statistics Office (KSH) has reported. The rate of employment has also continued to drop and reached a 12-year low. The three-month moving average seldom jumps as dramatically from one month to another as it did in December 2009-February 2010 (to 11.4% from 10.8%), but the 0.4% rise is almost as bad. Interestingly enough, an even sharper increase (0.6%) was observed in the very same period a year ago, as well. The Q1 print is up 1.3% from Q4 2009, which is considered a staggering increase even though we are aware that season factors could be responsible for this jump.

There is hardly any information available as to why the jump took place. The KSH's preliminary report fails to provide an explanation for the U-rate rising to levels last seen around the change of regime. What is evident, though is that no matter how strong a start the industry had this year, domestic demand remains feeble, so we still have to wait for favourable processes to kick off on the labour market. Over the past two years, 130,000-140,000 people lost their job in Hungary. The number of unemployed was 497,800 in January-March, some 95,000 more than in the same period of 2009 and about 170,000 more than at the onset of the economic crisis.

There were 3.72mn people employed in the first quarter in the population aged 15-74, about 45,000 less than in the same period of 2009, but nearly 200,000 less than three years earlier. The employment rate is currently at 1998 levels.

The number of those economically inactive totalled 3.47 million, down by some 60,000 yearyear. The participation rate rose to 54.9% in the first quarter from 54.7% in December - February and also up from 54.1% in the first quarter 2009. The rise in the U-rate is faster than the market expected. If what the analysts project becomes a reality, the peak in  Hungary’s jobless rate will be reached in the second or third quarter at a figure well over 12%. The good news is that those losing their job do not leave the market altogether, i.e. they do not flee into inactivity as before. The activity rate in Hungary has even ticked up over the past year.

Source: Econews: Hungary Economic News Letter & EVD.nl