Flash comment: Lithuania - May 18, 2012


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Flash comment: Lithuania - May 18, 2012: Unemployment increased temporary in the first quarter of this year

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Flash comment: Lithuania - May 18, 2012

  1. 1. Flash comment: Lithuania Economic commentary by Economic Research Department May 18, 2012Unemployment increased temporary in the first quarter of this yearEmployed, unemployed persons andactivity rate of the population Given global uncertainty and seasonality job creation is sluggishaged 15–64 despite the continuing economic growth and enterprise revival. In the first quarter of this year unemployment rate increased to 14.5% 1.8 78% from 13.9% in the forth quarter of 2011. Compared with the same 1.5 75% period last year unemployment is lower by 2.7 percentage points. 1.2 72% 0.9 69% Over the quarter the labour force decreased by 0.3% compared 0.6 66% with 4Q 2011. The number of employed persons was 1% less than a quarter ago and increased by 1.9% in annual terms. The highest 0.3 63% number of employed persons was lost by construction (9.8% qoq) 0.0 60% and agriculture (12%) enterprises, while industrial companies 2007 2008 2009 2010 2011 2012 Unem ployed pers ons , m (ls) increased the number of employed (1.7%). Employed persons , m (ls) Activity rate of the population aged 15–64 (rs) The number of unemployed grew by 4% compared with the quarter Source: Statistics Lithuania before, but was 16.8% lower than in the same period last year. The major share of the unemployed (50.5%) was persons who had lostUnemployment rate, % their jobs one year or more before. This long-term unemployment rate increased to 7.3% or by 0.2 percentage points compared with 40% 35% the last quarter in 2011 and remains at uncomfortably high level. 30% Furthermore, in comparison to 4Q 2011, number of inactive 25% persons who lost hope of finding a job has marginally declined. 20% 15% The good point that the youth (aged 15-24) unemployment level 10% dropped to 28.7% - the lowest level in three years. However, only 5% 0% 8% of people aged 15-24 are actually unemployed, since big part of 2007 2008 2009 2010 2011 2012 the youth are studying and are inactive in a job market. Only less Unemployment rate than 30% of youth in Lithuania are active in a labour market. The youth (aged 15–24) unem ployment rate Long-term unem ployment rate Source: Statistics Lithuania Outlook In our opinion the increase of unemployment level is temporary asEmployment expectations for the next 2- enterprises are still trying to increase efficiency of their activities. It3 months, pts will diminish slowly starting the next quarter but remain high due to 40 persistently high activity rate of the population aged 15-64 (71.6%). Labour activity will continue to be on high level also due rising 20 retirement age starting this year. 0 Employment expectations of companies in manufacturing, -20 construction and services were still positive and even increased -40 (excl. retail trade) in April meaning that there are more companies planning to increase number of employees than those planning -60 Indus try Construction layoffs. Consumers’ unemployment expectations have decreased Retail Services -80 during the same period, reflecting more safety of existing jobs. 2010 2011 2012 Source: Statistics Lithuania We forecast unemployment rate will be at 13% on average this year. A lower unemployment will have small positive impact on wages as well as consumption. There is an upside risk that unemployment could be higher than our current forecast as enterprises may remain cautious to employ new staff due to the uncertainty in the euro area and possible negative impact on Lithuania’s economy. Thus increasing number of employees might be postponed. New job creation will depend on growth in different sectors and new investments. Lina Vrubliauskienė Senior Economist + 370 5 258 2275 lina.vrubliauskiene@swedbank.lt
  2. 2. Flash comment: Lithuania Economic commentary by Economic Research Department May 18, 2012Swedbank Economic Research Department Flash comment is published as a service to our customers. We believe that we have used reliable sources and methods in the preparation of the analyses reported in this publication.SE-105 34 Stockholm, Sweden However, we cannot guarantee the accuracy or completeness of the report and cannot beek.sekr@swedbank.com held responsible for any error or omission in the underlying material or its use. Readers arewww.swedbank.com encouraged to base any (investment) decisions on other material as well. Neither Swedbank nor its employees may be held responsible for losses or damages, direct orLegally responsible publisher indirect, owing to any errors or omissions in Flash comment.Cecilia Hermansson, +46 8 5859 7720