KOF Employment Indicator: Significant Differences Between the Sectors

In April, the KOF Employment Indicator was at 5.6 points, which represents a slight rise compared to the first quarter of the year. At the time, the indicator was at 4.4 points (revised up from 4.2 points). The Employment Indicator is calculated on the basis of the quarterly KOF Business Tendency Surveys. In April, among other questions, the companies were asked to assess their current staff numbers and whether they plan to adjust them in the coming three months.

On balance, the majority of companies were of the opinion that their staffing levels were currently too low. At the same time, the majority also expects to raise their headcount in the next three months. The KOF Employment Indicator presents the average employment assessments and expectations of the respondents. With the Indicator currently slightly above the long-term average, which is close to zero, the short-term outlook for the labour market remains rather positive.

Favourable outlook for construction sector and other service providers – downturn in the hotel and catering sector

However, the overall picture hides the fact that there are substantial differences between the sectors. For instance, the Employment Indicator rose again in the construction industry and has reached a level last recorded six years ago. A positive order situation in civil engineering and commercial construction appears to result in jobs growth. Employment prospects among insurers, wholesalers and the other service providers also followed a positive trend. The latter include high-employment sectors, such as transportation, information and communication, real estate and housing as well as healthcare and social welfare.

By contrast, employment prospects in the hotel and catering sector are now far more pessimistic than at the beginning of the year. In this industry, the Employment Indicator has slipped significantly below zero. Following a strong winter season, the companies seem to expect a slightly weaker summer season. The situation for banks is also less than rosy: In this sector, the Employment Indicator has been in the negative for a year now. With Employment Indicators close to zero, the situation in the industrial sector and the retail trade is also on the mediocre side, and job numbers are neither expected to grow nor to decline.