It has been a while since Turkish Stats Office announced the labor report for March. Many analysts offered cautious optimism on the report. On the other hand there seemed to be some important points missed by most of those analysts. First, let us take a look at the headline numbers:
- In seasonally adjusted terms the unemployment rate in Turkey was down to 10% in March from 10.2% in February.
- In SAT non-farm unemployment rate was down to 12.2%.
- Youth employment was down to 18.2% from 18.5%.
- Workforce participation rate was up by 0.1% to 50.9%.
At first glance the numbers came out were absolutely to draw a brighter picture for Turkey’s labor market. But with further thought it was easy to see strange things going on with employment data showing the outlook may not be as rosy as some may want to believe.
Slowing Growth in Workforce and Employment
The long-term average growth rate of workforce and number of employed people in Turkey has been 3.2% and 3.1% respectively (ttm average 5.7% and 4.5%). However, in March total workforce only grew by 2.6% from 29.25 million to 29.35 million as well as number of employed people was up to 26.4 million by only 1.6%. This reading becomes even more interesting given its perfect correlation with GDP growth. Eventually, one might assert that the par below growth is here to stay from the perspective of labor market.
Employment in Services: The Biggest Drop in 10 Years
In my view the most interesting point to glean from the latest jobs report was the 54k decline in employment in services industry. As the services account for roughly 65% of total employment, this is likely to be one of the most important themes to watch in the upcoming months. We will see if this worrisome decline is set to emerge as a new trend or it is transitory.
In conclusion, even if it is not all doom and gloom in the employment side, my intention is here to stress the importance of watching to data in Turkey’s labor market for investors, as it is able to be a pretty leading indicator for some economic developments to come.