IT: Unemployment Rate

Highlights
The jobless rate fell from a downwardly revised 11.8 percent at the end of last year to 11.6 percent in the first quarter. The decline reversed the previous period's rise but still left a 0.1 percentage point increase versus the end of 2015.

The decline is consistent with the Italian economic recovery gaining some traction and the more recent monthly unemployment data have pointed to another decrease in the current period. However, the rate is still dangerously high and remains a key factor behind the persistent sluggishness of consumer spending.

Definition
The unemployment rate measures the number of unemployed as a percentage of the labour force. In addition to the quarterly data, a less detailed monthly report is also available.

Description
Unemployment data are published on a quarterly basis and are very old by the time they are released (they are published about 11 weeks after the end of the reference quarter). The data are published both by the number of persons out of work and by the unemployment rate. The unemployment rate is obtained from the ratio between persons seeking employment and the total labor force as measured by the labor force survey (LFS). Italy uses the International Labour Organisation criteria as adopted by Eurostat to compile the data.

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.