On August 27, data were released on the French labor market for July.
There are three points to mentioned
1 – Monthly net inflows to Pole Emploi (the French institution that manages unemployment) has increased rapidly in July. Except for the technical bug in August 2013, the number pf people registered at Pole Emploi was always up during the last 6 years (with the exception of October 2010 no explanation).
On the graph the monthly change of people registered is presented. It shows people from category A who are looking for a job but have no activity, category B no job but reduced activity and category C no job but with long activity.
During the last four months on the chart the number of new registered has increased rapidly. This is consistent with the low growth momentum seen for the French economy (I made a comment here on a French survey today)
This chart shows that there is probably a structural problem with the French economy. In 6 years there was no opportunity to improve the labor market seen by this indicator. There is something wrong and not working well.(It is not only Hollande moment)
The second graph represents inflows and outflows at Pole Emploi each month
Two remarks here
The blue line represents inflows. It is the number of people who each month are registered at Pole Emploi. The recent increase is the problem. It comes from a category that gathered people who usually were self-employed or have a small company and who have stopped their activity. It is also people who have negotiate their exit from a company. It is not redundancy as it can come from the employee. This is a process that is expected to simplify the procedure when someone wants to quit. It is also a way for companies to negotiate with people they want to fire. But because it can be costly if it is redundancy they use this way of doing.
Anyway the two situations reflect a poor momentum in activity. In the first someone stops his company, in the second every one takes advantage of the law to hasten a procedure which is usually put in place because the economic momentum is low.
Concerning outflows form Pole Emploi (red line) we have to notice that the curve is almost downward trending. Inflows are up but outflows are down. We better understand the first chart. One important reason and the most important in July to explain this trend comes form people who are at Pole Emploi and find a job. This specific statistic is shown below. In July the number of people from Pole Emploi who has found a job is the lowest, comparable to the level seen in March 2009 at the trough of the cycle, just after the collapse of Lehman.
At this moment there was a strong negative shock. This is not currently the case but it shows the pessimism of French companies. Their horizon is blurred and they don’t want to hire people because they don’t know what will happen.
Emmanuel Macron the new economy minister will really have a lot to do.