OECD unemployment falls marginally as recovery slows

Unemployment in the OECD continued to fall in September, to 7.3%, down from 7.4% in August. But improvements in the labour market have slowed down and the unemployment rate remains 2.1 percentage points higher than the pre-COVID levels of February 2020.

In addition, the OECD noted that falls in unemployment largely reflect the return of temporary laid-off workers in the United States and Canada, where they are recorded as unemployed, whereas they are recorded as employed in most other countries.

In Canada, the unemployment rate dropped in September by 1.2 percentage points to 9% and in the US by 0.5 percentage points to 7.9%. This decline continued in October when unemployment fell to 8.9% in Canada and 6.9% in the US.

In the euro area, where temporary lay-offs are not included in unemployment, the unemployment rate was stable at 8.3% in September, 1 percentage point higher than in February.

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France saw the highest increase of 0.4 percentage points to 7.9%, while Latvia (8.4%) and Portugal (7.7%) each experienced the largest decline by 0.4 percentage points.

Composite leading indicators (CLIs) in OECD countries pointed to a continued slowing of the economic recovery even before tighter COVID-19 restrictions were reintroduced in parts of Europe.

CLIs use indicators that have shown a predictive relationship with GDP and, depending on the country, can include measures such as consumer confidence, industrial confidence, passenger car registrations, manufacturing production measures, orders, demand for services or interest-rate spreads.

OECD statistics show that composite leading indicators for October in the US, Japan, Canada, Germany, Italy and the euro area continued to increase but at a slower pace.

In France, the CLI continued to stabilise, while in the United Kingdom the CLI contracted for the second straight month, potentially reflecting heightened uncertainty over the prospect of no trade deal with the EU at the end of the Brexit transition period, the OECD noted.

Among major emerging economies, the CLIs for India and Brazil continued to increase but at a slower pace. In China, on the other hand, the CLI for October, for the manufacturing sector, continued to increase at a steady pace, while in Russia the CLI stabilised.

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