How Much Did COVID Affect Swiss Jobs Figures?

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Thursday could be a busy day for the Swiss Franc, with two fundamental events.

First is the release of September unemployment data, and then we have SNB’s Jordan giving a press conference. We’ll focus on the unemployment data because Switzerland has an uncommon way of measuring joblessness.

The situation is further complicated with the latest increase in COVID cases in the Alpine nation.

Switzerland was one of the harder-hit countries in the first wave, with the majority of their cases concentrated near the southern border with Italy. And they haven’t been immune from the latest spike in cases across Europe.

Although, unlike other countries, their new case numbers have not exceeded the “first wave”. Yet.

Swiss Unemployment

As COVID took hold, Swiss unemployment naturally moved higher – to 3.4%, which for most other countries would be a fantastic unemployment number.

But Switzerland doesn’t use the same parameters for unemployment, and only considers citizens actively seeking employment. They also have a habit of not renewing work visas if unemployment rises too much.

Switzerland maintained an unemployment rate of 2.3% for months leading up to the COVID outbreak, so the jump to 3.4% is significant given the context. Since then, the unemployment rate has remained relatively constant, despite a drop in COVID cases during late spring.

Case numbers started increasing the summer as vacationing got underway. In parallel, the unemployment rate ticked up slightly.

Outlook and Market Reaction

The consensus among economists is that Swiss unemployment will stay at the 3.4% rate recorded last month. This is the same as the high point during the last wave of COVID cases.

Swiss authorities have not mentioned anything related to new lockdowns, but their neighbors to the south have.

Most of the job losses have been concentrated in the tourism industry. And despite maintaining open borders, the lack of visitors is having a marginal impact on the economy.

The Internal Market

Last week, retail sales showed a comfortable 2.5% growth (despite showing a slowing trend from the prior month), suggesting that internal demand remains healthy.

The Swiss service sector remains well in expansion territory. Geneva is even considering raising the minimum wage to the highest in the world.

The unemployment rate is largely centered in the tourism industry, which accounts for just 2.9% of the economy. And the SNB is largely ignoring joblessness to focus on maintaining currency stability.

Therefore, the jobs number is likely to have a muted impact on the market.

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