CH: Unemployment

Tue Nov 10 00:45:00 CST 2015

Consensus Actual Previous
SECO (NSA) 3.3% 3.3% 3.2%
SNB (SA) 3.4% 3.4% 3.4%

The labour market lost some ground in October. Unadjusted the number of people out of work was up 3,403 at 138,226 to lift the jobless rate a tick higher to 3.3 percent. However, seasonal factors tend to boost unemployment at the start of the quarter and adjusted for these the increase was a much smaller, but not insignificant, 962 or 0.7 percent. This left the adjusted jobless rate unchanged at 3.4 percent. The results were in line with market expectations.

Still, there were some additional signs of weakness in the vacancies figures which showed an adjusted 0.5 percent decline versus September and a 14.5 percent drop from a year ago. That said, October's fall followed a surprisingly strong monthly rise last time suggesting that the trend here is closer to flat.

Today's data underline why households have become much more negative about employment prospects in recent months. Having dipped below its year ago level in December 2014 (3.4 percent versus 3.5 percent) the unadjusted unemployment rate moved back above in March and the gap has held steady at 0.2 percentage points since May. The labour market may not be deteriorating quickly but at a 5-year high for October last month, the unadjusted rate threatens to undermine consumer confidence and household spending through year-end.

Amidst rising expectations for an ECB ease next month, further monetary accommodation from the SNB would also seem increasingly probable.

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.