2Q unemployment rate the lowest in 10 years

• Employment rose rapidly but only among the part-time workers
• The unemployment rate decreased more than expected
• The shortage of labour has reached the levels of last economic boom 

Employment rose rapidly but only among the part-time workers 
The number of the employed rose significantly, by 2.0%, or by 13,000 persons, over the year, in Estonia. Employment rose among the part-timers in the services’ sector and the manufacturing. According to the Estonian Tax and Customs Board, who has more detailed data on employment by sectors, employment increased the most in the construction sector.

The unemployment rate decreased more than expected 
Employment rose due to lower unemployment, the number of the inactive remained at last year’s level. The number of the unemployed decreased by the same amount as was the increase in the employment, 13,000 persons. Unemployment shrank among the short-term unemployed (up to 6 months). The unemployment rate (5.1% in Q2) would have been even lower without the ongoing work ability reform (that motivates people with a disability to look for a job). Around a third of the registered unemployed were people with decreased working ability in July.

The shortage of labour has reached the levels of last economic boom 
A shortage of labour was the most important factor restricting business for 30% of manufacturing, 36% of service companies and for 61% of construction companies in July. While the labour market indicators look more and more like during the last economic boom, the number of the working-age people is much smaller: -70,000 compared with 2006-2007.

The shortage of labour keeps wage growth rapid 
Employees feel more and more secure in the labour market. The number of employees who have left their jobs on their own initiative is growing and the rate of job vacancies is on the rise. Therefore, wage pressures will persist. Tax data show that gross wage growth remained strong in the second quarter, close to 6%, year-on-year.

Employment should continue growing in the second half of the year. Companies plan to increase the number of workers in the following months, according to a survey by the Estonian Institute of Economic Research. As demand for labour grows, but the supply of labour is limited, at least short-term, the number of job vacancies should grow. It seems that the negative impact of the work ability reform on the unemployment rate will be smaller than expected and the unemployment rate will be smaller in 2018 than in 2017.

Source: Swedbank

Growth in manufacture of computers and electronic products

According to Statistics Estonia, in June 2018, the production of industrial enterprises increased by 3% compared to June 2017. Production increased in manufacturing, energy as well as in mining.

In June, the total production in manufacturing was 2% higher compared to the corresponding month of 2017. In June, over a half of the branches of industry exceeded the volume of the same month of the previous year. The growth in production was mostly due to an increase in the manufacture of computers and electronic products, fabricated metal products and chemical products. There was also a slight increase in the manufacture of food products. Among the branches of industry with larger shares, production fell in the manufacture of wood and furniture.

In June, 68% of the total production of manufacturing was sold to the external market. According to unadjusted data, sales of manufacturing production for exports increased by 6% and sales to the domestic market increased by 3% compared to June 2017.

In June 2018, compared to May, the seasonally adjusted total industrial production decreased in total by 1%. Production of manufacturing fell by 2% compared to the previous month.

Compared to June 2017, the production of electricity decreased by 21%.Volume index of production in manufacturing and its trend, January 2009 – June 2018

Read more from Statistics Estonia

The turnover of retail trade enterprises decreased in June

According to Statistics Estonia, in June 2018, compared to June of the previous year, the turnover of retail trade enterprises decreased 1% at constant prices.

In June 2018, the turnover of retail trade enterprises was 613.6 million euros.

The turnover growth of stores selling manufactured goods slowed down in June. While in May, the turnover of these stores increased 6% compared to the same month of the previous year, in June the growth was 2%. The turnover increased in four and decreased in two economic activities. In one economic activity, sales remained on the level of the previous year. Compared to June of the previous year, turnover increased in stores selling household goods and appliances, hardware and building materials (9% growth), in stores selling via mail order or the internet (7% growth), in pharmacies and stores selling cosmetics (5% growth) and in non‑specialised stores, e.g. department stores, selling predominantly manufactured goods (1% growth). Compared to June of the previous year, turnover decreased in other specialised stores, such as stores selling predominantly computers and their accessories, books, sports equipment, games, toys, etc., in stores selling second-hand goods and in non-store retail sale (stalls, markets, direct sale). In stores selling textiles, clothing and footwear, turnover remained at the same level as in June of the previous year.

The turnover of grocery stores decreased 4% compared to June 2017.

The turnover of enterprises engaged in retail sales of automotive fuel decreased 4% compared to June of the previous year.

Compared to the previous month, in June, the turnover of retail trade enterprises decreased 2%. According to the seasonally and working-day adjusted data, the decrease was also 2%. In the six months of 2018 (January–June), the turnover of retail trade enterprises increased 0.5% compared to the corresponding period of the previous year.

Turnover volume index of retail trade enterprises and its trend, January 2008 – June 2018

The statistics are based on the VAT declaration data of the Estonian Tax and Customs Board.Statistics Estonia published the monthly summary in four working days. For the statistical activity “Economic indicators of trade enterprises”, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia performs this statistical activity.

Source: Statistics Estonia

Consumer price index affected the most by housing

According to Statistics Estonia, the change of the consumer price index in July 2018 was 0.1% compared to June 2018 and 3.5% compared to July of the previous year.

Compared to July 2017, goods were 2.9% and services 4.4% more expensive. Regulated prices of goods and services have risen by 10.1% and non-regulated prices by 1.7% compared to July of the previous year.

Compared to July 2017, the consumer price index was affected the most by housing, which contributed nearly a third of the total increase. Over a half of the latter was contributed by electricity that reached homes, which became 16.9% more expensive. More than a fourth of the total increase was contributed by motor fuel. Petrol was 19.3% and diesel fuel 16.8% more expensive than in July 2017. A greater impact on the index came also from alcoholic beverages and tobacco, which were 9% and 7.6% more expensive, respectively. Compared to July of the previous year, the price of beer increased by 11.7%. Of food products, the biggest price increases were seen for frozen fruit and berries (26%) and eggs (22%), and the biggest price decreases for potatoes (30%) and sugar (23%).

Compared to June, in July the consumer price index was affected the most, on the one hand, by seasonal sales of clothing and footwear, and on the other hand, by housing where electricity that reached homes became 5.8% more expensive in a month. Alcoholic beverages also had a greater impact on the monthly change of the index, as after June discounts ended, there was a 3.1% price increase.

Change of the consumer price index by commodity groups, July 2018
Commodity group July 2017 –
July 2018, %
June 2018 –
July 2018, %
TOTAL 3.5 0.1
Food and non-alcoholic beverages 1.7 -0.5
Alcoholic beverages and tobacco 8.5 2.3
Clothing and footwear -1.4 -6.5
Housing 7.8 2.2
Household goods 0.2 -0.6
Health 4.1 0.1
Transport 5.7 0.4
Communications -3.6 -0.5
Recreation and culture 2.6 0.9
Education -3.9 0.0
Hotels, cafés and restaurants 4.1 1.4
Miscellaneous goods and services 3.1 -0.7

Statistics Estonia publishes the consumer price index on the 5th working day of each month, after the end of the reporting period. For the statistical activity “Consumer price index”, the main representative of public interest is the Ministry of Finance, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

Source: Statistics Estonia