Hungary Labor Market Tightens | ING Think Snapshots

The latest labor market statistics from the Hungarian Central Statistical Office show that the unemployment rate in October 2024 remained steady at 4.5%, which aligns with the official three-month moving average of 4.6%. This places the estimated number of unemployed individuals in Hungary at approximately 220,000-225,000.

In October, there was a minor decline in the number of employed individuals, likely influenced by factors such as population decrease and retirement. Additionally, the number of inactive persons decreased slightly. This shift is reflected in the overall decrease in unemployment, employment, and persons in employment compared to the previous month.

Analyzing the three-month moving average, a decrease in the number of employed individuals by 4,500 can be attributed to both population decline and a return to inactivity. The number of people in employment also declined by 5,500, with a portion contributing to the uptick in the unemployment rate. These changes suggest that seasonal work might have been a significant factor in the slight drop in employment levels.

Despite a somewhat gloomy business outlook, with some firms showing signs of ‘hidden’ unemployment by retaining staff beyond planned capacity, the labor market remains tight. Rising wages and recruitment costs contribute to this trend, prompting companies to endure tougher economic periods by maintaining their workforce. However, the ability of companies to withstand prolonged economic weakness remains uncertain.

Looking ahead, the labor market will be influenced by seasonal employment opportunities in the winter months, potentially improving the unemployment rate. Growth in the construction and services sectors might further contribute to a positive labor market outlook. However, challenges in the industry sector, marked by talks of rationalizing working hours or layoffs due to decreased orders, could limit overall improvement. It is predicted that the unemployment rate could reach around 4.3% by the end of the year.