Unemployment Rate in Switzerland at 3.1% for June

Unemployment Rate in Switzerland at 3.1% for June

09 July 2021

SECO has informed that for June the unemployment rate hit 3.1%, which means situation is quite stable, same as inflation that is expected to get anchored at 1% in long perspective.

Stable Situation of Labour Market and Inflation

              Switzerland's State Secretariat for Economic Affairs has given data for unemployment for June. The rate was at 3.1% which is higher than expectations of 2.9% and than a rate for May that was at 3%. Still situation is quite stable at labour market even though economy is just recovering from the COVID-19 crisis. Additional data provided by the SNB showed that inflation is expected to stay at 1% in the long-term perspective, which is below the SNB’s target, while forecast for GDP for this year is at 3.5%, up from 2.5%-3% prevised before.

Sticking to Policy

              In the meantime, the bank has kept record low interest rates of minus 0.75% and decided to stick with its policy of interventions that are aimed at stopping CHF exchange rate from getting too high and keep inflation close to target. Mainly last year the Swiss franc got very strong as due to the pandemic many investors turn to buy Swiss francs as safe haven assets.

Switzerland Versus COVID-19

              Switzerland may have quite good situation on the labour market and inflation under control, but still the country is battling the effects of the COVID-19 pandemic. The federal government was forced to spend as much as 40 billion francs to aid economy, give unemployment benefits or support local companies. Social expenditure at this moment is at CHF 21,300 per resident, the highest in 20 years. Since the beginning of the pandemic there have been 704,352 cases reported in the country with 10,896 deaths. Though recently restrictions have been eased with allowance to entry for travellers from the Schengen area and some other selected countries, where situation is good, as well as loosening rules for wearing masks outdoor and allowing some large events, Delta variant might cause troubles soon. As of now 30% od the new contagions in the country are caused by Delta variant. Meanwhile, only 38.1% of Swiss population is fully vaccinated – 3.26 million people got both doses of vaccine with generally 7.74 million vaccine doses already distributed. A concerning issue is the fact that still 20% residents over 80 years old have not been vaccinated even though vaccination program is running at good pace and vaccines are widely accessible.

CHF Exchange Rate

              CHF exchange rate has recently dropped a bit, recording lower prices than in 2020. This week, for instance, it has went down already by 0.26% versus US dollar, which means losses for a second week in a row. The main reason for weaker performance of CHF is a risk appetite on the market with global economy recovering. Investors now are eager to sale Swiss francs and buy some riskier assets as they look forward to making gains.