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Is the persistent rise in unemployment bad news for Denmark?

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Ritzau/AFP/The Local - [email protected]
Is the persistent rise in unemployment bad news for Denmark?
The trend of rising unemployment in Denmark has now persisted for eight consecutive months. Photo by nika tchokhonelidze on Unsplash

The Danish labour market is grappling with a minimal but persistent increase in unemployment, as indicated by the latest figures from Statistics Denmark.

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The statistics bureau's preliminary data reveals that the number of unemployed people increased by 700 people in June, bringing the total number of jobless people in the country to 83,700. That translates to an unemployment rate of 2.8 percent.

This rate has roughly remained consistent for the past four months. Even though unemployment has increased month-on-month, the increases were essentially minimal (especially when one takes into account that there are around 3 million people in Denmark's workforce).

Still, the trend of rising unemployment has now persisted for eight consecutive months, with approximately 8,000 more people being unemployed since October of 2022.

Experts surprised by resilient labour market

Recently, economic experts have expressed surprise at the relatively modest impact of the economic headwinds faced by Denmark on the labour market.

Kristian Skriver, a senior economist at the Danish Chamber of Commerce (Dansk Erhverv), told news wire Ritzau that the development indicates a surprisingly robust labour market.

"Seen in the light of the economic headwind from sharp interest rate increases and the growth slowdown in the Danish export markets, it is surprising that unemployment has not increased more," he said, pointing to the most notable drivers of unemployment.

Laurids Cordtz Larsen of the Confederation of Danish Industry (Dansk Industri) also noted that recent labour market developments were unexpected.

"The low number of unemployed workers persists, clashing with past forecasts," Cordtz Larsen said, adding that most forecasts expected to see rising interest rates having a more pronounced negative effect on the Danish labour market.

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Continued rise in unemployment?

Skriver expects unemployment to continue to rise slightly towards the end of the year.

The construction industry, in particular, could be affected, as interest rate increases are leading to fewer construction projects.

"A lot of construction is still underway, but fewer new projects are being started. This will eventually affect the activity level in the construction industry and lead to job cuts," he said.

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Statistics Denmark releases official unemployment figures on a monthly basis, typically around 20 days after the end of the reporting period.

The indicator published by the agency on Wednesday provides an early insight into the upcoming numbers and is based on a smaller dataset, resulting in a higher degree of uncertainty.

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