A French version with more details is available on my French blog
Numbers at the French labor agency (Pôle Emploi) have improved a lot in August. The number of people registered at Pole Emploi has dropped for the first time since April 2011. This clearly shows a more satisfying labor market behavior but there are so many surprising numbers in this report that we cannot imagine a homogenous improvement.
The first surprising number is this large drop in people registered. In August the number was -50 000. Such a number has not been seen since November 2000. It was a long time ago and growth was stronger than what is currently seen. In 2000 GDP growth was 3% and explained easily the labor market improvement. This is not currently the case. In the Budget for 2014 that has been presented today by the French government, expectations for 2013 GDP growth are just at a mere 0.1%. What is puzzling is that the carryover growth number for 2013 at the end of the first half is already 0.1%. This means that the government does not expect a stronger momentum for the third and the fourth quarters. (Carry-over growth at the end of the first half is the calculation of the average growth rate for 2013 with Q3 and Q4 GDP level equals to Q2 GDP number.) – There is still fragility in the French labor market.
Nevertheless there is an improvement in the economic situation. That’s what all companies’ surveys in France show. And this can be seen on the French labor market. Separation rate has dropped a lot since the end of spring. But at the same time, companies do not want to hire more people. In other words, companies feel that the economic outlook is changing; they want to keep employment at the current level but do not want it to increase it. It’s consistent with companies having stronger expectations on their activity in a foreseeable future. What is surprising is the large numbers that result from this behavior.
In this number of people registered at Pole Emploi there are two distinct parts. One is related to the economic situation and that’s what I have just mentioned. It is a question of flows.
The other part is more on management of people who are registered. It’s a question of stock. On this issue we’ve seen a change in behavior. Radiations have increased dramatically since last spring. This can arrive because one registered didn’t come to sign a paper or administrative radiation because of an incomplete file. The chart below shows the deep change in regime.
The last chart is a comparison between the flows of people who are new registered at Pole Emploi, this is the blue line on the third chart, and the flows of people who exit from Pole Emploi and this is the red line. The two black lines are 3 month moving average. We see that in-flows are almost stable when looking at the average. August number was weak but the 3 month average is stable. Outflows numbers are trending upward. The 3 month average lines are now converging due to a strong increase in exit.
This improvement reflects only radiations, not new jobs.
So the change on the labor market is not as deep as the number (-50 000) could let us imagine. It reflects partly an improvement on the economic side but mainly an administrative management of people who are registered. This situation does not reflect yet a real improvement on the labor market but a way to decrease the number of registered. We will have to wait before seeing higher job numbers. The current positive statistics reflect mainly the negative part of the labor market management (radiations). We have to expect now that the positive side will be found in 2014 with new jobs.