Payden & Rygel: Job vacancy rates in the US and EU

Payden & Rygel: Job vacancy rates in the US and EU

March 29, 2024

Labor force
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Last week, the Swiss National Bank (SNB) surprised markets with a rate cut, sparking speculation about which central bank might be next. Could it be the ECB?

We preach patience for a few reasons. First, the SNB gained confidence to cut by seeing the Swiss core inflation rate below its 2% target for the past ten months (versus zero months for the euro area). Second, in ECB President Lagarde's words, policymakers 'will have a lot more of [data] for our June meeting' to decide. 

Still, she added that 'whether there is confirmation of the beginning of moderation on the wage front' and 'whether [firm] profits absorb and act as a buffer for wage increase' will be important factors in the decision. The euro area labor market is tight, with the job vacancy rate at 2.7% in Q4 2023. Although the vacancy rate has eased from its June 2022 peak of 3.2%, an elevated job opening rate points to faster wage growth and upside inflation risk.

So, will the ECM cut rates? Maybe. but there is little urgency to do so from the labor market perspective.

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