A situation on the labor market surprisingly deteriorated in September. The number of people seeking a job increased from 487k to 493k. In September, seasonality usually slightly decreases the jobless rate, however, this time it rose to 8.4%. Seasonally adjusted jobless rate moved from 8.5% to 8.7% and reached the highest level since February 2011. Declining number of vacancies diminishes a chance that the negative trend could change any time soon. The labor market responds with some delay to recession. GDP started to decline in Q4 2011. Seasonally adjusted unemployment remained more or less flat 18 months. In September situation changed, but we will have to wait for data in coming months to confirm a negative trend. At the end of 2012, jobless rate is forecasted to reach 9.1%. In December 2011, it was 8.6%. Anemic recovery expected in 2013 should not be of much help for the labor market. Thus, we can expect jobless rate to decline as late as 2014.
Unemployment rate (Sep): 8.4%
Consensus: 8.3%
Previous (Aug): 8.3%
Industrial production surprised negatively and significantly lagged behind expectations. Calendar variations cannot be blamed, because both, August 2011 and August 2012, had the same number of working days. Declining sales, employment and new orders add to the negative picture of today’s release. The Czech industrial sector suffers from both worsening situation abroad and sluggish domestic demand. In August, production in all important sectors decreased. Assembly of IT equipment and electronic devices dropped by 19.4% yoy, output of steel mills declined by 13.6% yoy and production of automotive industry decreased by 3.6% yoy. There are few sectors with rising output; however, their impact on total figures is insignificant. Negative situation forces industrial firms to cut costs. Thus, employment declined 1.0% yoy and real wages are lower than a year ago. Lower real household income undermines further domestic demand. An outlook for coming months remains negative. New orders decreased by 1.4% yoy and PMI keeps below 50point threshold last 6 months. In 2012, industrial output is likely to stagnate thanks to positive numbers posted earlier this year.
Actual (Aug): -3.1% yoy
Consensus: 0.5% yoy
Previous (Jul): 4.2% yoy