The latest data suggest that the labour market strength, which has been a key feature of advanced economies this year, might be coming to an end. Admittedly, unemployment rates have generally been stable at very low levels. However, falling job vacancy rates and survey measures of hiring intentions suggest that weaker momentum in broader economic activity has begun to hit labour demand. We expect unemployment to rise across the major advanced economies in the months ahead, which will add to the drag on consumer spending from rising inflation. The one potential upside of this is that labour markets tightness should ease, reducing the risks of a wage-price spiral. But, for now, measures of labour shortages remain at record-high levels, meaning that there is still a significant degree of labour market mismatch which will keep wage growth too high for central banks’ comfort for a while yet.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services