The recent resilience of labour markets partly reflects a lag before higher interest rates feed through fully to economic activity. But employment has also been supported by the industry-led nature of the economic slowdown and by the fact that firms are still trying to restore headcounts following pandemic-driven shortages. Both of these props seem more sustainable. Unemployment will probably rise in time, but if tightening cycles are as close to their peaks as we assume, the rise should be modest by past standards.
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