CH: Unemployment

Tue Jul 07 00:45:00 CDT 2015

Consensus Actual Previous
SECO (NSA) 3.1% 3.1% 3.2%
SNB (SA) 3.3% 3.3% 3.3%

The labour market superficially made progress in June as the unadjusted number of people out of work fell 3,093 to 133,256. This reduced the jobless rate by 0.1 percentage points to 3.1 percent, its lowest print since October last year. However, seasonal factors are quite strongly favourable in June and adjusted for these unemployment rose 1,404 to 143,631 which was easily enough to hold the adjusted rate at May's 3.3 percent mark.

However, there was marginally better news on job prospects as vacancies crept 0.2 percent higher on the month although even then, they were still some 26.2 percent below their level in June 2014.

The underlying weakness of today's data is consistent with recent PMI surveys that have found an ongoing and significant decline in employment. Some aspects of domestic demand have shown more promising signs of late but business confidence is cautious and a real recovery in net hiring looks unlikely any time soon.

The unemployment rate measures the number of unemployed as a percentage of the labor force. The monthly report provides both raw and seasonally adjusted data; the latter are the more important for identifying short-term trends.

Like the employment data, unemployment data help to gauge the current state as well as the future direction of the economy. Employment data are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.

By tracking the jobs data, investors can sense the degree of tightness in the job market. If employment is tight it is a good bet that interest rates will rise and bond and stock prices will fall. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.