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How well will the labour market recovery and wage growth hold up in the face of multiple shocks? The OECD’s latest 2022 Employment Outlook highlights increasing tightness in the global labour market, while downplaying potential for a wage-price spiral.
If true, this reinforces central bankers' confidence in hiking rates now, while potentially allowing dovish tilt to future monetary policy setting further down the line if a wage-price spiral doesn't materialise.
- Pandemic job losses have more than been recovered: the 66 million job gain in OECD countries since the COVID threat receded following a 57 million loss at the pandemic onset. The OECD-country unemployment rate was 4.9% in July (vs 5.3% pre-pandemic low in Feb 2020 and early-pandemic high of 8.8%).
- Conditions are seen loosening into next year. Participation is expected to grow further into 2022 and 2023, loosening conditions slightly, whilst unemployment stabilises at around 5.3% at the end of 2023.
- A comparison of the Q4 2022 projection versus Q4 2023 implies that unemployment rates should marginally in the Euro Area, Mexico and the OECD aggregate, whilst the US should see a larger 0.5pp increase to normalisation.
- Australian unemployment is expected to hold steady from Q4 2022 - Q4 2023, whilst Japan's unemployment rate will likely decrease slightly into Q4 2023.
Source: OECD
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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