FR: ILO Unemployment Rate

August 18, 2016 12:30 CDT

Actual Previous
Level 9.6% 9.9%

The ILO jobless rate for mainland France fell a surprisingly sizable 0.3 percentage points to 9.6 percent in the second quarter, with the previous quarter's rate left unrevised at 9.9 percent. Including overseas territories, the unemployment rate fell to 9.9 percent from an unrevised 10.2 percent in the prior period.

Representing a decrease in the number of unemployed by 74,000 to 2.767 million, the decline put the mainland rate 0.6 percentage points below the year ago level and at its lowest mark since the second quarter of 2012.

The unemployment rate fell across all age groups, most prominently among 15-24 year olds, for whom it fell 0.4 percentage points on the quarter to 23.7 percent. For the central 25-49 year old group the jobless rate fell by 0.2 percentage points to 9.0 percent, and it was down 0.1 percentage points to 6.4 percent for those aged 50 and over.

A minor negative in an otherwise positively slanted report is a 3 tick quarterly increase to 6.7 percent in the underemployed rate, i.e., the percentage of those who have part time jobs but would like to work more.

In view of the generally disappointing results of the French economy in the second quarter, which can be summed up by a zero quarterly GDP growth rate, the improvement indicated by the ILO report in an admittedly still weak labor market is a somewhat surprising bright spot. Since the period covered is pre-Brexit, it may be a poor indicator of future developments, but it does slightly improve the odds of a comeback by the French economy and could be a sign that labor market reforms are making some progress.

The unemployment rate measures the number of unemployed as a percentage of the labour force. It is based on the International Labour Organization (ILO) 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 report contains data on both total joblessness and just mainland unemployment; the latter is regarded as the more significant.

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.