Fresh cracks emerge in Hungary’s labour market
The recent commentary highlights concerning trends within Hungary's labor market, including a slight uptick in the unemployment rate, reaching approximately 4.7% by August, according to the Hungarian Central Statistical Office. Per the full note , this underscores a broader demographic decline and an uncertain economic outlook, particularly influenced by geopolitical tensions in the region. The desk's thesis maintains that despite these cracks, a catastrophic scenario remains unlikely, projecting an unemployment rate of around 4.5% for the year. As market participants digest these developments, they should also consider the absence of immediate high-impact events, which may limit market volatility in the near term.
What the desk is arguing
The desk frames this as a cautious assessment of Hungary's labor market with evidence pointing towards a deterioration in employment conditions. As the unemployment rate edges upwards, analysts note significant challenges which may complicate economic recovery. In August, a slight increase to 4.7% was observed, and the official three-month moving average now stands at 4.8%, just shy of a decade high.
We observe that the number of unemployed individuals has surged to around 230,000-235,000, nearing levels not seen in ten years. This trend is concerning, especially as one-third of the unemployed have been seeking jobs for over a year, illustrating systemic challenges within the labor landscape.
Where it sits in our coverage
Currently, our consensus target for the Hungarian currency against the Euro is set at 1.075, with a range spanning from 1.04 to 1.12. Notable firms contributing to this outlook include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
While our targets hover near the median, the desk's projection aligns closely with jpmorgan's target at the higher end of the spectrum, indicating optimism amid cautious sentiment.
How other firms see it
Several firms align with this cautious view on Hungary's labor market, acknowledging the demographic decline and labor participation drop. Conversely, bofa holds a more pessimistic stance, reflecting concerns over prolonged unemployment.
Key currency pairs to monitor in connection with this thesis include EUR/HUF and USD/HUF, particularly as geopolitical factors continue to shape trading sentiment throughout the region.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Unemployment in Hungary has increased to 4.7%, indicating turbulent labor market conditions.
- 02Demographic decline and geopolitical tensions are contributing to labor market challenges.
- 03The desk maintains a conservative unemployment projection of around 4.5% for the year.
- 04Market participants should observe EUR/HUF and USD/HUF for potential spillover effects.
Market implications
Traders should monitor the EUR/HUF and USD/HUF as indicators reflecting the stability of Hungary's labor market amidst these developments. A failure to improve unemployment figures may lead to currency weakness, particularly if the rate exceeds 4.8%, the recently reached average, provoking a reassessment of forecasts.
Risks to this view
A significant catalyst that could invalidate this outlook includes a drastic escalation in geopolitical tensions or economic shocks which could lead to a sharper rise in unemployment above 5%. Such a scenario would likely exacerbate the labor market's challenges and impact currency positioning adversely.
Older quick take Quick take Published 13:01 Hungary Fresh cracks emerge in Hungary’s labour market Cracks are reappearing in the Hungarian labour market amid demographic decline, an uncertain business outlook and geopolitical tensions. The situation is far from catastrophic, but better days are unlikely anytime soon We're maintaining our labour market forecast for an average unemployment rate of around 4.5% this year, though prolonged geopolitical uncertainty presents an additional risk 4.8% Unemployment rate (Jun–Aug) ING estimate 4.7%/ Previous 4.6% Hungary's unemployment rate has risen slightly once again, according to the latest labour market statistics from the Hungarian Central Statistical Office (HCSO. In August, the unemployment rate rose to 4.7% according to the monthly model estimate.
Meanwhile, the official three-month moving average survey moved upwards to 4.8%, which is now just 0.1ppt below the 10-year high seen at the end of 2025. Both indicators suggest a negative trend emerging in the labour market. The number of unemployed people also increased, reaching approximately 230,000-235,000 by August and approaching a 10-year high.
The deterioration is evident not only in the key indicators, but also in the fact that one in three unemployed people has been looking for a job for more than a year, suggesting that finding employment is becoming increasingly difficult. Examining the details, we can conclude that the population decline continued at the familiar rate of 5,000 people per month. This contributed to the decline in the number of economically active people in August.
At the same time, the decline in labour market participation was also due to people reaching retirement age, with nearly 9,000 individuals transitioning from active to inactive status. Unsurprisingly, employment also declined by roughly 21,000 people from July to August. Of these, 14,000 had already left the labour market, while 7,000 joined the ranks of the unemployed.
This all fits into the broader picture of an increasing number of companies implementing workforce rationalisation measures to cut costs. Seasonal jobs, which typically emerge during the summer, usually help to stabilise labour market indicators. Assuming this premise remains, we can infer that underlying trends may have deteriorated more significantly than the headline figures suggest this August.
Changes in the labour market since mid-2022 ('000, 3-m moving avg) Source: HCSO, ING "> Source: HCSO, ING Based on the figures, the Hungarian labour market remains tight but remains significantly less severe than at the end of the 2010s when acute and widespread labour shortages were commonplace. Ongoing geopolitical uncertainty and expected changes in domestic economic policy continue to limit the growth of business optimism. According to the latest GKI survey, businesses' willingness to hire remains slightly negative, meaning those planning to reduce their workforce slightly outnumber those planning to expand.
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