Euro Area: +6.6 million jobs since 2013

During the first half of 2017, the employment level came back at its pre-crisis peak level. This was already the case for the first quarter but it has been confirmed for the three months to June.
This robust profile in employment reflects a catch up when growth is more robust and with less uncertainty. On the graph we see that the employment profile is smoother than the GDP profile and is clearly in a catch up period.
Since the beginning of the recovery at the beginning of 2013, the Euro Area has added 6.6 million jobs.  Continue reading

Labor law reform in France: momentum on the move

The Macron presidency is finally going to be able to unleash its full momentum. Talks between the government and trade unions on the broad trends for forthcoming changes to French labor legislation have taken up a good deal of time over the past few weeks. The government decrees were announced on August 31 and will come before the French Council of Ministers on September 21: the President’s term can now really get started.

The government’s aim is to make the labor market more adaptable to change by altering certain aspects of labor law. Continue reading

Job and unemployment momentum – the challenge of a presidential term

So François Hollande’s challenge has finally been met: unemployment at the end of his presidential term has fallen and is now lower than when he became president. This was a daunting task, but he reached his aim as the jobless total rose from 9.7% in the second quarter of 2012 to 10.5% in Spring 2015 before eventually falling to 9.6% over the first three months of 2017.
We have definitely seen a shift in the unemployment curve.

However, unemployment still has the potential to fall much lower as it stood at only 7.2% in the first quarter of 2008, so we cannot settle for such high joblessness, which is why fresh steps must be taken to make the job market more adaptable.

The aim here must be twofold: improve the French economy’s ability to create jobs when business is more buoyant, while also seeking to close the skills gap between available jobs and employees’/the jobless’ ability to meet them. It is vital for job growth to be able to flourish in the economy’s healthier sectors and for the French economy as a whole to be able to adjust more quickly to the overall economic cycle through employment and the capacity to garner the necessary human resources to drive buoyant sectors. However, this means cutting back jobs in declining sectors, as the country’s inability to cut jobs creates severe inertia and leaves it ill-equipped to reap the benefits of economic improvement. Sectors that do well after a recession are rarely those that drove the cycle before the dip, so it is important to be able to reallocate resources swiftly to reap the benefits of economic growth when it takes off. These factors are pro-cyclical in nature and can extend and reinforce growth momentum.

Two metrics clearly reflect these notions of the labor market’s reaction time. Continue reading

Virtuous dynamics of employment in the Euro zone

There was a real improvement in the employment momentum in 2016 in the Euro Area. Employment growth was 1.3%, the best figure since 2007.
This dynamics will continue at least during the first half of 2017. The Markit sub-Index on employment suggests a real improvement in months to come.
Since 2014 the employment is upward trending and a positive profile. In fact it is since the end of austerity policies
ea-2016-q4-employment-markit.png Continue reading

French households are optimistic on jobs

The momentum of the French labor market is dramatically changing.
The households’ confidence index for May was published by INSEE this morning. It was at its highest since October 2007. The crisis is almost over as confidence is back to its pre-crisis level. The most important point is the dramatic improvement of the labor market component of this index.
Households’ perception of the unemployment dynamics is at its lowest since June 2008. Again it’s back to its pre-crisis level. This is a radical change. Households are more optimistic on the future, for them individually and for all the French people.

Earlier this week, statistics on unemployment were published by the ministry of labor. The number of registered at the French Agency, Pôle Emploi, trends downward for the first time. This statistics includes people who look for a job even if they are able to work for a limited time during the month. This is a real improvement. We saw a change in trend in spring 2015 and now it’s a slowdown.
The labor market dynamics is changing. People’s perception of its momentum is now more positive and official statistics show a real improvement.
The current context in France is nevertheless very different when we see a lot of strikes on gasoline supply and in different sectors. This reflects  a real balance of strength between the government and trade unions. The main reason for these demonstrations is the fact that labor negotiations, in a new law on the labor market, could now take place at companies level and no more at a sectoral level. This could undermine trade unions’ power in the negotiation.

There is a clear opposition between the optimism seen in the different statistics and the social unrest. If this social unrest is not too long, the impact on economic activity will not be significant.
But we don’t know yet how the government and trade Unions will discuss (it hasn’t started). The risk is to lose credibility for the first who will accept a deal. But a deal is necessary to maintain household’ optimism.

US Job Market in October: A catch up or a change in trend?

The number of new jobs, 271 000, is strong in October. In absolute terms this is remarkable. The question we must ask is the following: is it a change in trend or just a catch up after two mediocre months?
If this is a change in trend with a November figure consistent with that of October then this increase, for sure, the likelihood of Fed rate hike in December. This is the reasoning that one often reads, at least implicitly, this afternoon. If it’s just a catch then the question of a change of Fed’s strategy remains.

The problem is this: In the last three months (August, September, and October 2015), average job creations were 187,000 after 243,000 in the previous three months. In 2014, for the same 3 months the figure was 228,000 and that of the previous three months was 257 000. The profile is similar but at a lower level than in 2014. There are no additional tensions spontaneously when we look at the data. Continue reading