FRANCE DATA: Unemployment Rises Slightly Again, Broader Labour Market Loosening
Nov-13 08:30
France unemployment rose slightly again in Q3. The ILO mainland unemployment rate came in at 7.5%, up from 7.4% in Q2. This quarter's reading is 0.3ppt higher than Q3 2024.
- The mainland unemployment rate has been trending around 7.25% since 2021, with 2025 so far showing a very mild upward trend (increasing 0.2ppt since Q1).
- Last week, we noted French private sector wage growth slowing slightly (still positive in real terms) and showing signs of stability, broadly consistent with the latest unemployment data. (See bullet FRANCE DATA: Private Sector Wage Growth Slows Slightly, Signs Of Stability)
- Looking at the all-France (excl. Mayotte) unemployment rate (which has been almost perfectly correlated with the mainland rate), the headline rate came in at 7.7%, up from an upwardly revised 7.6% in Q2, and also 0.3ppt higher than Q324. INSEE notes that the revision is due to usual updates of seasonal adjustment coefficients.
- Youth unemployment (aged 15-24) fell 0.2ppt to 18.8%, bringing the Y/Y decrease to 0.8ppt. Unemployment grew 0.2ppt in both of the other broad age categories (25-49 and 50+).
- The long-term unemployment rate (jobseeking for at least one year) and activity rate were "virtually stable", per INSEE. The former increased 0.1ppt vs Q2 (now 1.8% of the labour force) and the latter decreased 0.1ppt (now 75.2%).
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RIKSBANK: Risks To Outlook Are Balanced: Bunge
Oct-14 08:26
Comments from Riksbank Deputy Governor Bunge aren't too surprising. They support the case for the Riksbank holding at 1.75% for the foreseeable future. Note that Bunge has recently been promoted to First Deputy Governor following Anna Breman's move to the RBNZ.
- "In our forecast, we expect inflation to slow down significantly over the next six months. The latest inflation outcome for September supports this view"
- "My basic view is that the VAT cut will not change the picture of inflation beyond the short term and it is therefore something we should ‘look through’. But we need to monitor the impact on households’ and businesses’ expectations and behaviour."
- Ms Bunge stressed that the conditions are in place for a stronger economy: real wages are rising and households' purchasing power is increasing. There are also signs that the recovery is on slightly firmer ground. ...."However, it is worrying that the labour market looks weak and we are still living in a very uncertain world"
- "It was important to be forward-looking and to cut the interest rate now. We still need to be able to act if developments differ from what we now see ahead of us. The risks to developments are balanced, which is also reflected in our forecast for the policy rate. Beyond external events, a key question is how households will react now that their purchasing power is increasing"
FOREX: FX OPTION EXPIRY
Oct-14 08:26
Of Note:
AUDUSD ~1bn at 0.6500.
EURUSD 1.77bn at 1.1600 (wed).
EURUSD 3.83bn at 1.1575/1.1600 (thu).
- EURUSD: 1.1500 (848mln), 1.1520 (230mln), 1.1600 (849mln).
- USDJPY: 151.50 (690mln), 152.00 (831mln).
- USDCAD: 1.4000 (288mln), 1.4010 (310mln).
- AUDUSD: 0.6500 (990mln).
STIR: GBP 1y1y Moves Back Towards Broken Trendline
Oct-14 08:20
GBP 1y1y moves back towards the broken trendline drawn off the ’23 closing high (located at 3.5469% today). May’s closing high (3.7548%) was untested during the recent rally.
- Today’s move lower is driven by broader risk-off price action surrounding Sino-U.S. trade tension and a soft UK labour market report.
- We previously noted that a meaningful move higher in the contract would require a more serious consideration of the idea that the BoE’s rate cutting cycle is over, as opposed to deferred. We also suggested that markets were underappreciating the odds of a Q4 rate cut.
- Terminal rate pricing derived from the SONIA futures strip now points to around 50bp of further rate cuts vs. ~40bp at the time of our prior bullet covering GBP 1y1y.
- Dovish comments from BoE Governor Bailey (18:00 London) would probably provide enough impetus for a break back below the trendline.
- Bailey remains the key swing voter for the Q4 decisions, in our view.
- He previously pointed to a downside surprise in wage growth being one of his motivations for voting for an August rate cut. However, we aren't sure today’s data will convince him either way.
- Next week we will receive the final CPI report ahead of the November MPC meeting and that is likely to be of huge importance to Bailey.
Fig. 1: GBP 1y1y (%)
Source: MNI - Market News/Bloomberg Finance L.P.
