The unemployment rate was 8.6 percent in September, while it was 8.3 percent in December . The economic effect of the second wave was generally milder than expected, with many countries still showing positive growth rates amid quarter-on-quarter sectoral shutdowns.
While youth unemployment has risen again and is reaching first wave levels at 18.5 percent, the sectoral effect can be seen indirectly in the unemployment figures. This concerns increasingly flexible contracts and an unequal number of young people working in industries, such as hospitality and non-essential retail, that are disproportionately affected by the pandemic.
The modest effect of the second wave on the labour market to date means that the outlook for domestic demand remains optimistic once the economy reopens. A fast recovery in demand is still on the table with sales sustained and savings rising significantly. We saw this in the first wave of products use, and once vaccines take hold and fear of the virus retreats, this could occur for services as well.
That said, lockout extensions, through layoffs, but also through bankruptcies, raise the likelihood of higher unemployment. When support schemes stop, we remain concerned about lagging impacts. For most countries, furlough schemes have already been extended well into the year, providing relief for the H1 outlook, but the question is what impact an increase in bankruptcies will have. For now, the image looks good, but our basic case scenario remains that unemployment rises on the basis of fading funding.