In a conjuncture note published on 20 December, the Luxembourg statistics bureau remarks that a slowdown trend will likely continue over the coming months--as the eurozone rides through a recession. But, the shortage in workforce and ageing population “should cushion the impact of the economic downturn on unemployment,” the note reads, as they leave more space for unemployed residents to apply for positions. For 2023, it foresees an unemployment rate of 5.1%.
14,622 jobseekers were registered at the national job agency Adem in November--a year-on-year decrease of 4%--and 12,226 openings were advertised on the platform at the same time, Statec reported on 20 December too. According to Statec, some sectors may however continue to see a slowdown in employment. Among these are the construction, hospitality, services and ICT sectors, though the service industry remains among the biggest recruiters, alongside the social action, health, public service, education and financial sectors.
The average wage cost are showing signs of slowdown too: during the third trimester it grew by only 4.5% compared to 6.9% during the first part of the year and 7.8% during Q2.
Inflation shows signs of slowing down
Fossil fuel prices have also become more attractive again for Luxembourg’s Belgian neighbours--whose fuel discount have now been dropped--though France still offers more attractive prices at the pump. The grand duchy saw a 10% decrease in sales of fossil fuels over the first 11 months of 2022. In January 2023, the three countries should display similar prices, which should lead the grand duchy’s sales to go up again.
Meanwhile, inflation in the grand duchy has started displaying the first signs of a downturn--going below 6% to 5.9% in November 2022--this is mainly thanks to the reduction of fossil fuel prices at the end of the year. However, on the bright side, if the trend is confirmed by the US over the next few months, this could “contribute to reducing imported prices in the eurozone and therefore would further slow down inflation in Luxembourg,” says Statec.
GDP and interest rates to increase
EU inflation is expected to continue to rise in 2023--by 6.3% rather than the previously expected 5.5%--meaning that central banks are planning on contributing to increase rates several times before it can be said that inflation is going down on the long term. Policy rates could also remain higher than 3% for longer than expected.
Luxembourg’s GDP showed growth during Q3 (+1.1%) in contrast with the eurozone, but this is mainly thanks to the financial sector (+2.6%), and therefore “an isolated phenomenon” that is unlikely to continue into the final quarter of the year as predictions remain uncertain and rather pessimistic.