Hungary’s labour market continues to improve in May. Data released by the Central Statistical Office (KSH) earlier today showed that the number of employed people increased by 149 thousand in a year time from which 116 thousand more people works on the domestic primary labour market.
The activity rate went up to 60.8% (it is 0.1%pt higher compared to previous month and 1.3%pt higher than a year ago). The unemployment rate in Hungary is down to 5.5% vs. 5.8% in April and 7.1% a year ago.
It means that the Hungarian labour market is getting very tight and the business may have difficulties to find new worker from Hungary. While the shortage of skilled labour across Central Europe and the Baltics is offering unions serious leverage after years of slack, it also threatens to stifle investment and economic growth.
That said, the tight labour market may keep wage increase at high level (around 6-7% Y/Y), so the domestic consumption may remain strong in the coming 2 years and it may give a stabile base for Hungarian economic growth.
“Despite of the Brexit vote we expect that the Hungarian GDP may increase around 3% Y/Y in 2017 as the government may introduce some fiscal loosening during the autumn,” said KBC Market Research in a report.
The material has been provided by InstaForex Company – www.instaforex.com