Finally some good news from the Hungarian economy

There has been negative news in many areas of the Hungarian economy recently, but employment and unemployment have been the exceptions.

According to the latest figures by the Central Statistical Office (KSH), the average number of employed persons aged 15–74 years was 4.746 million in May-July 2024. The primary labour market employed 4.580 million, up 26,000 in annual terms. The number of people working abroad increased by 5,000 to 109,000, while the number of those in public works went down by 12,000, to 57,000.

So neither the weakness in industry and exports nor subdued consumption seems to be causing serious problems in the labour market. Rather, companies may be holding back investment while trying to retain workers.

In addition, unemployment data show a pick-up in recruitment, with the U-rate falling from 4.7% at the beginning of the year to 4.2% by end-July. Unemployment is therefore gradually approaching the levels seen before the Covid crisis, reflecting full employment.

Of course, employment and unemployment tend to lag behind economic changes, so it may be a few months before companies rethink their staffing plans, but it is good news that the jobless rate keeps falling even in a stagnating economy.

The high level of employment may be explained by the phenomenon of overstaffing, i.e. firms maintaining (temporarily) larger than necessary workforces to avoid recruitment difficulties during a future upturn.

Moreover, if the Hungarian economy recovers somewhat in the coming months, in line with forecasts, it may well be possible to avoid layoffs.

Cover photo (for illustration purposes only): Getty Images