The jobless rate in mainland France dipped 0.1 percentage points from a marginally higher revised fourth quarter level to 10.0 percent in the period just ended. The decline was the first since April-June 2014 but still left the rate some 0.2 percentage points above its mark a year ago. Including overseas territories the rate stood at 10.3 percent, also down a tick versus last time. The outcome was in line with market expectations.
In fact the headline data were rather worse than first appearances suggest as the employment rate in metropolitan France slipped 0.2 percentage points to 64.1 percent. Moreover, the decrease here would have been more marked but for 0.1 percentage point rise in the temporary contract rate as the permanent contracts were off 0.3 percentage points at 48.8 percent.
More recent business surveys have pointed to some pick-up in employment growth this quarter but hiring has still been only modest and any further reduction in unemployment is likely to be limited. Consumer confidence has been trending clearly higher since late last year but slipped in May. Without more substantial gains in employment the risk is that the upturn in confidence peters out and with it, the recent recovery in household spending.
The unemployment rate measures the number of unemployed as a percentage of the labor force. It is based on the International Labor Organization definition of unemployment, which excludes jobseekers that did any work during the month and covers those people who are looking for work and are available for work.
The data report the number of unemployed persons (quarterly average) for metropolitan France and for metropolitan France plus overseas departments. The metropolitan measure is regarded as the more useful guide.
The data provide a comprehensive report on how many people are looking for jobs and the unemployment rate. These numbers are the best way to gauge the current state as well as the future direction of the economy. Analysts in France and Europe tend to focus on the number of French out of work rather than the unemployment rate as we do in the U.S.
Despite the delay in publication of these data, investors can sense the degree of tightness in the job market. If labor markets are tight, investors will be alert to possible inflationary pressures that could exist. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall.
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