Unemployment increased by 4.2 thousand people, bringing the unemployment rate back to 5%. However, it was not the rise in the number of unemployed that caused the higher unemployment rate, but rather the decrease in the number of employed individuals. The denominator in the unemployment rate formula includes the economically active population (unemployed + employed). The change in the number of employed individuals does not indicate such large job cuts, exceeding 200 thousand. Therefore, we have a partial answer to the economy’s response to rising labor costs and overall business expenses – a shift towards the informal economy.
It is worth noting that in July, there was another increase in the minimum wage, and this likely contributed to the unusual rise in the unemployment rate for this month.
A slight increase in the unemployment rate is likely to continue. We will probably end the year with an unemployment rate of 5.3%.
