Labour Market Continues Softening

The Swiss unemployment rate rose as expected in December to 2.2% (seasonally adjusted, vs 2.2% survey, 2.1% prior).

• The unemployment rate has slowly drifted higher in the last few months from two-decade lows. The SNB said in their December rate decision press statement that they expected unemployment to continue to rise gradually.
• The number of unemployed rose by 10k vs Dec 2022, to 107k, while the number of job vacancies fell 13k over the same period to 35k. The ratio of the number of unemployed persons to vacancies stands 54% higher than a year ago (2.82 vs 1.83 in Dec’22), suggesting a loosening labour market.
• It is difficult to get an up-to-date view of Swiss labour market data from the perspective of second-round inflation effects. The available data suggests real wage growth has been broadly flat or even slightly negative recently, and in contrast to the ECB and other central banks, the SNB has not mentioned wage growth as a matter of concern for inflation in its recent press conferences.
• Nominal wage growth came in at 0.9%, 1.8%, 1.8%, 1.8% Y/Y for 4Q’22-3Q’23 respectively, against CPI inflation of 2.9%, 3.2%, 2.1%, 1.6% in the same periods. Productivity growth data is only available yearly, in terms of hours worked, and for 2022 as of now (+1.2% Y/Y). Low nominal wage growth suggests the Swiss labour market might have been less tight than the low unemployment figures may otherwise imply.