CEE: Labor market flows in the region

On the radar

• Final inflation rate was revised to 2.5% y/y in November, while in Croatia it was confirmed at 3.8% y/y.
• Current account was in surplus in October both in Czechia and in Poland. In Romania, year-to-date current account posted a sizeable deficit.
• Today, Hungary’s central bank holds a rate setting meeting.
• In Czechia, producer prices are scheduled at 9 AM CET.
• In the afternoon, Poland will publish core inflation in November.

Economic developments

In CEE8, between the second and the third quarter of 2025, 324 thousand unemployed people aged 15-74 in the EU found a job. During this period, roughly 354 thousand unemployed people transitioned out of the labor force (CEE7 without Slovakia where data is missing for 3Q). At the top of that, another 443 thousand of employed transitioned out of labor force as well. On the other hand, 498 thousand those who were outside the labor force became unemployed and another 618 thousand found a job. Considering net job creation: all inflows into employment (324k from unemployment and 618k from outside the labor force sum up to 942k) exceed outflows from employment (251k to unemployment and 443k to outside the labor force that sum up to 694k), implying net employment gains of roughly 250k. Looking on the trend over last two years however, we see that annual average of those who transitioned from employment to unemployment have increased. Although labor market flows between the second and the third quarter of 2025 are prone to seasonal effects, in that period we can observe net job gains alongside rising participation accompanied by only a small uptick in unemployment.

Market movements

Although final November’s inflation rate in Poland was revised marginally up to 2.5% y/y, the easing pressure has been apparent over last months. In December, the central bank switched to “wait and see” mode and the central banker Wnorowski stated it is very unlikely that interest rates will change before March 2026, though a cut is not guaranteed for that month. He does not rule out several rate cuts later in 2026, cautiously forecasting the reference rate with a "3" at the front at the end of the year. Romania’s government survived another attempt by the far-right opposition to topple it in a vote of no confidence, amid growing resistance to austerity measures grows. The Czech koruna has weakened against the euro at the beginning of the week, while the Hungarian forint and the Polish zloty remained marginally stronger. The long-term yields have declined slightly across the region.

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