FR: ILO Unemployment Rate

Wed May 23 00:30:00 CDT 2018

Consensus Actual Previous
Level 8.5% 8.9% 8.6%

Mainland joblessness unexpectedly rose in the first quarter. An 83,000 or 0.3 percent quarterly increase followed a 207,000 decline at the end of 2017 and put the number of people out of work at 2.586 million, down just 0.4 percent from a year ago. As a result, the jobless rate climbed 0.3 percentage points to 8.9 percent.

Including overseas territories, joblessness was also up 83,000 at 2.747 million. On this basis, the unemployment rate was 0.2 points higher at 9.2 percent after a slightly firmer revised reading in the fourth quarter.

The first quarter deterioration should not come too much of a surprise in the wake of the unusually large improvement seen in the previous period and should not be seen as a change in trend. Still, the latest figures are consistent with the slowdown in economic activity already reported over the period (quarterly GDP growth 0.3 percent after 0.7 percent) and helps to explain the recent a slight softening in consumer confidence. The risk is that without a better second quarter, sentiment weakness further at the expense of economic growth.

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.