Swedish unemployment at lows. We reveal their secret…

Good news for Sweden. Sweden’s unemployment rate fell to 6.2 percent in July 2023 from 6.4 percent in the corresponding month a year earlier, and below the market forecast of 7.8 percent.

This is the lowest unemployment rate since December 2019, as the number of unemployed fell by 9 thousand from a year earlier to 364 thousand. Meanwhile, the number of employed people increased by 128 thousand to a record high of 5.533 million.

The employment rate increased by 1.3 percentage points to 73.1 percent in July, and the labor force participation rate also increased by 1.3 percentage points to 78 percent. Seasonally adjusted, the unemployment rate in July stood at 7.3. So not only are there fewer people looking for work, but the labor force population has increased and, nonetheless, jobs have been found for everyone.

Here is the related graph:

Not everyone is doing so well, for example France. The number of people registered as unemployed in mainland France increased by 23.8 thousand from the previous month to 2.817 million in July 2023, the fastest increase since April 2021.

The sharp rise brought unemployment levels to the highest level since the beginning of the year , suggesting that the European labor market may be yielding to the ECB’s higher interest rates after a period of stubborn rigidity. The rise was attributed to an increase of 16.5 thousand middle-aged workers, while unemployment rose by 8.9 thousand for those under 25.

So restrictive policy, much to Frankfurt’s delight, is having an effect on employment in the euro area. Instead, we reveal the secret of Sweden’s employment success.

Let’s look at the Euro/Swedish Krona exchange rate.

The Swedish Krona has depreciated by about 10 percent against the euro since 2021, so the Swedish economy has regained competitiveness against other EU countries that are part of the euro. The extra 10 percent comparative competitiveness, within a single market system, is a lot, and leads to competitive displacement of counterparts.

Easy to make employment when you have monetary power, the same power Euro Area Countrie, Italy first, gave up.