Czech Republic: Unemployment increased further in February

Actual (Feb): 9.2%
Consensus: 9.1%
Previous (Jan): 9.1%

The unemployment rate came out a touch above expectations as it increased slightly in February. Turnover on the labor market has slowed compared with January, the figures show that both hiring and layoffs were lower. Seasonal factors are negative during winter and keep the unemployment rate elevated. This year, temperatures were significantly below average in February and, thus, were a bigger constraint for construction sector. However, we can also see a progressive rise in the seasonal-adjusted unemployment rate, which suggests a reaction of the labor market on the worse economic performance. The Czech economy was in a technical recession in 3Q-4Q 2011 and the GDP may slightly decrease also in the first quarter this year.

Good news is that in February, the number of vacancies increased, although from the long-term point of view they are still very low. Next couple of months should bring a decrease in the unemployment rate thanks to seasonal jobs. In average, we should see the unemployment around 8.5 pct this year.