Global| Jul 21 2015Finland's Unemployment Problem Persists
Summary
Finland's economy has been depressed for the last four years. It is still struggling to shrug off the loss of a lot of logging-related business to other nations and the departure Nokia and related technology businesses. While the EMU [...]
Finland's economy has been depressed for the last four years. It is still struggling to shrug off the loss of a lot of logging-related business to other nations and the departure Nokia and related technology businesses. While the EMU as a whole saw a larger rise in its unemployment rate, the euro area has been experiencing a reduction in its unemployment rate over the last two years. According to the harmonized rate of unemployment, Finland's rate, while lower, is still creeping up.
However, Finland's domestic measure of unemployment fell sharply in June, dropping to 10.0% from 11.8% in May. The domestic measure puts the unemployment rate higher than the EMU measure and the EMU measure actually ticked higher in June. The domestic rate is extremely volatile, but the 12-month average of each series is nearly identical. While we might want to read something positive into the drop in the Finnish unemployment rate in June, it does not seem to be a true signal.
Finland's domestic measures show employment rising sharply in June, by 93K as unemployment fell by 44K driving the reduction in the unemployment rate. Employment is gathering momentum, rising at a 26% pace over three months, up from 9.6% over six months with both far better than the 12-month pace showing a reduction of -1.4%. By comparison, the number unemployed is rising on all those horizons but without real trend. The number unemployed is up by 8.5% year-over-year. With Finland's labor force lower over 12 months, falling by 0.5% year-over-year, the combination produces a clear rise in the year-over-year unemployment rate. Both the domestic and the harmonized versions of the unemployment rate show that rate higher year-over-year.
The short-term trends are not very reliable because there is pronounced seasonality in the data and since the domestic data are not seasonally adjusted (NSA). While Finland's own unemployment drop as reported is encouraging, it is also a flawed signal. Finland's labor market as yet shows no credible signs of breaking out of its malaise.
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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