Despite unfavourable seasonal effects, the share of unemployed cut two ticks in February after taking a two-month break. It reached 3.7% and surpassed the market’s expectations. After seasonal adjustment, the share of unemployed dropped to 3.4%. We also see another increase in the number of vacancies, which reached almost 240,000. That figure is already very close to the number of reachable applicants (258,000), thus showing that the situation on the labour market remains very tight. There is a lack of both skilled and unskilled workers. We see a shortage of an available labour force in industry and especially in the construction sector. We fear that the lack of available workers might curb the potential recovery of the construction sector. The labour offices recorded a decline of unemployment in 75 districts while an increase was recorded in only two.     

The stretched situation on the labour market has passed through to wage growth. According to our estimate, wages increased 7.8% yoy in 4Q17. The surge in public sector salaries played a role to a gross extent. Together with record low unemployment, the increase in public salaries will propel wage pressures in the private sector, as well.

As of March, seasonal factors will push the share of unemployed downward. It should hit its bottom in October, when it will approach 3%, in our view. The average in 2018 should record 3.3% after last year’s 4.1%.