IT: Unemployment Rate

Tue Mar 13 04:00:00 CDT 2018

Consensus Actual Previous
Level 11.0% 11.0% 11.2%

As indicated in the monthly reports already released, the jobless rate fell a couple of ticks to 11.0 percent in the fourth quarter of 2017. This was the lowest quarterly reading since the third quarter of 2012.

Unemployment has been trending down since early last year and reached a trough in December at 10.9 percent. January 2018 saw a 0.2 percentage point rise to 11.1 percent but this could prove only temporary given the inherent volatility of the monthly data. Even so, the latest readings still leave Italy with the third highest rate in the entire EU and compare with an average national rate of just 6.1 percent in 2007, before the onset of the Great Recession.

The persistently high level of Italian joblessness reflects the sluggishness of the domestic economic recovery and the desperate need for labour market reform. The inconclusive election held earlier this month suggests little change on either front over the foreseeable future.

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.

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.