Labor market remains tight in CEE

On the radar

• In Slovakia unemployment rate laned at 4.8% in April while current account deficit was at EUR -291 million in March.
• Today, at 10 AM CET Poland will release a series of data: industrial output growth, wage and employment growth, as well as producer prices.
• At 10.30 AM CET, Slovenia will also release producer prices
• At 11 AM CET Croatia will publish unemployment rate and real wage growth.

Economic developments

Labor market remains tight in the region. Yesterday, Slovakia released unemployment rate for April that remained at 4.8%; a historically record low figure. In other countries we also see low unemployment rates. Today we look at the region how it stands compared to other European countries with compensation growth and unemployment rate. In most of the region, the nominal growth of compensations remained double-digit in 2024 while inflation already eased. The highest nominal growth of employees’ compensations was recorded in Croatia and Romania (18%) and in Hungary and Poland (around 12%). This is visibly above the EU average. It must be noted that the inflation rate was also higher in the region compared to the rest of Europe. Nevertheless, the real wage gains were quite substantial last year. Only Czechia and Slovakia experienced weaker nominal growth of compensations in 2024. AT the same time unemployment rate remains below the EU average in all CEE countries. That may also sustain higher wage pressure.

Market movements

On the FX market, we have seen mostly strengthening of the local currencies since the beginning of the week. EURCZK is close to 24.90, EURHUF is at 402 while EURPLN moved back down to 4.24 after brief increase to 4.28 on Monday. Finally, EUR RON moved toward 5.06 in the aftermath of the election. Long-term yields have declined across region and most notably in Romania. The central bank Governor in Romania said further interest-rate cuts may be considered only after a return to market and political stability. At his point, preparations to form a new government take place and appointing a new Prime Minister is priority.

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