Hungary’s labour market eases, but structural pressures remain
The desk anticipates that Hungary's labour market is experiencing short-term easing, but structural pressures remain due to demographic challenges. Per the full note source, while wage growth has moderated to 7.1%, and participation rates have risen, these factors are largely influenced by seasonal trends rather than deep-rooted changes. The increasing supply-side pressures from an ageing population underscore potential ongoing challenges in the labour sector, which may impede economic momentum in upcoming quarters.
What the desk is arguing
The desk frames this as a pivotal moment for Hungary's economic outlook, suggesting that the current labour market statistics reveal both temporary improvements and significant underlying issues. While the rise in participation is noteworthy, it does not adequately address the compounding issue of a declining working-age population, especially as the recent headline unemployment uptick reflects more entrants into the job market rather than sustainable job creation.
The most recent data from HCSO indicates that average wage growth has slowed sharply to 7.1% year-on-year in June, a significant deceleration compared to the prior month and the lowest increase since 2021, excluding anomalies from earlier one-off bonuses. This signals a potential shift in the labour market dynamic that could have implications for consumer spending and inflation.
Where it sits in our coverage
According to our consensus target, we expect the EUR/HUF to trade around 1.075, with a range between 1.04 and 1.12. Notably, firms like jpmorgan and bofa have set their targets at 1.10 and 1.04, respectively, for March 2026:
Our view aligns most closely with the lower projections from bofa, reflecting a cautious assessment of Hungary's economic resilience amidst demographic pressures, thus we reside at a conservative end of the forecast spectrum.
How other firms see it
Firms aligned with our perspective include jpmorgan, suggesting a similar trajectory in EUR/HUF, while those with a contradictory stance such as bofa foresee more downside potential in the pair. The suggestions from these firms highlight differing assessments regarding how structural labour market issues may impact economic output.
Market participants should also monitor the Hungarian job market developments and related indicators, such as the EUR/USD trajectory, as these will be critical in forecasting currency movements propelled by economic fundamentals.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Wage growth in Hungary has decelerated to 7.1%, the lowest since 2021, indicating potential labour market strain.
- 02Demographic decline will likely continue to exert pressure on the economy and labour market sustainability.
- 03Participation rates may have improved, but this reflects short-term seasonal factors rather than lasting structural changes.
- 04The current economic landscape demands caution regarding currency positioning related to Hungary.
Market implications
Traders should watch the EUR/HUF closely, particularly as it approaches levels near 1.075 amidst these labour market indicators. The implications of wage growth trends and demographic pressures could provide critical signals for future positioning.
Risks to this view
An unexpected rebound in wage growth or a significant improvement in labour market participation could challenge the current bearish sentiment. Additionally, any policy shifts by the Hungarian central bank aiming to address demographic woes may force a reassessment of EUR/HUF outlook.
Articles Hungary’s labour market eases, but structural pressures remain Published 12:45 Hungary Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Although wage growth moderated and participation rates rose, seasonal factors rather than structural changes drove both. Supply-side pressure is expected to increase in the labour market even in the short term due to a continuous decline in the working-age population Peter Virovacz and Zoltán Homolya An ageing population in Hungary is shrinking the pool of working-age people, adding to labour market pressures The Hungarian Central Statistical Office (HCSO) has released data on wages and unemployment. Although the earnings figure showed a significant slowdown in growth in June, the overall trend remains positive.
The headline unemployment figure rose in July, driven by additional workers entering the job market. While the participation improved the short-term outlook, this does not mean that the problem of population decline has disappeared. It is expected that pressure from negative demographic trends will be put on the economy in the coming quarters.
The era of double-digit wage growth is fading 7.1% Average wage growth (Jun) ING Forecast 8.4% / Previous 8.7% The latest average earnings statistics from the HCSO have come as a significant negative surprise after a long time. The figures show a 7.1% year-on-year increase in gross average earnings in June 2026. This represents a huge slowdown compared with the previous month and is the lowest figure since 2021 (excluding the dip in 2023 caused by the base effect of the one-off bonus for armed forces).
Net earnings continue to grow faster than gross earnings due to changes in family tax allowance and tax relief for mothers since the start of this year. Median earnings have risen at a slightly faster rate than the minimum wage, remaining close to the minimum wage increase rate. This may indicate that wage compression persists, primarily in the first to third income quintiles, a situation that companies have sought to address.
Nominal and real wage growth (% YoY) Source: HCSO, ING "> Source: HCSO, ING Purchasing power continues to grow dynamically. Against a backdrop of low inflation and robust wage growth, net real earnings increased by 7.6% YoY in June. Combined with relatively high consumer confidence, this provides a solid foundation for further increases in consumption.
Similar trends are evident in the main sectors: wage increases of between 7.0% and 8.1% were observed in the private, budgetary and non-profit sectors. A closer examination of the data reveals that above-average wage increases were seen in the mining and electricity sectors, as well as in the construction industry. Conversely, wage growth was below average in the transport, warehousing, accommodation and catering sectors.
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