The unemployment rate in MK has edged down to 11.50% in September 2025, marking a steady improvement from 12.80% recorded in December 2023. This decline reflects ongoing labor market recovery despite persistent structural challenges. The rate remains above the pre-pandemic average of 10.90% seen in early 2023, signaling room for further improvement.

Drivers this month

• Seasonal hiring in agriculture and tourism sectors contributed to a 0.20 percentage point drop.
• Government employment programs helped absorb 0.10 percentage points of unemployed workers.
• Manufacturing sector layoffs slowed, reducing downward pressure on jobs.

Policy pulse

At 11.50%, the unemployment rate remains above the central bank’s comfort zone, which targets a range of 8-10%. This suggests continued accommodative monetary policy, with interest rates held steady to support growth and job creation.

Market lens

Immediate reaction: The MKD currency weakened 0.30% against the EUR within the first hour post-release, reflecting market caution amid slower-than-expected job gains. Short-term government bond yields rose 5 basis points, signaling modest inflation concerns.

Core macroeconomic indicators provide context for the unemployment rate’s trajectory. GDP growth for MK slowed to 2.10% annualized in Q2 2025, down from 2.80% in Q1. Inflation remains moderate at 3.40%, slightly above the central bank’s 3% target. Wage growth has been sluggish, averaging 2.20% YoY, which limits consumer spending power.

Monetary Policy & Financial Conditions

The National Bank of MK has maintained its benchmark interest rate at 3.50% since May 2025, prioritizing inflation control while supporting employment. Credit growth remains subdued at 4.50% YoY, reflecting cautious lending amid global uncertainties.

Fiscal Policy & Government Budget

Fiscal stimulus continues through targeted job creation programs and infrastructure spending. The government’s budget deficit narrowed to 3.20% of GDP in H1 2025, down from 3.80% in 2024, reflecting improved tax revenues and controlled expenditures.

External Shocks & Geopolitical Risks

Ongoing regional tensions and supply chain disruptions pose downside risks to MK’s export sector, which accounts for 35% of GDP. Energy price volatility also pressures manufacturing costs, potentially slowing hiring in energy-intensive industries.

Chart Insight

The chart illustrates a steady decline in unemployment over the past 18 months, with sharper improvements in the last three quarters. Seasonal patterns and government interventions have supported this trend, but the pace of decline has moderated recently.

Market lens

Immediate reaction: MK government bond yields rose modestly by 5 basis points, while the MKD currency weakened 0.30% against the EUR. Equity markets showed muted response, reflecting investor caution amid mixed labor data.

Looking ahead, MK’s unemployment rate trajectory depends on several factors, including domestic policy, external conditions, and structural reforms. We outline three scenarios:

Bullish Scenario (30% probability)

• Continued economic growth above 3% annually.
• Successful labor market reforms reduce structural unemployment.
• Unemployment falls below 10% by mid-2026.

Base Scenario (50% probability)

• Moderate GDP growth around 2.00-2.50%.
• Unemployment declines gradually to 11% by end-2026.
• Monetary policy remains accommodative but cautious.

Bearish Scenario (20% probability)

• External shocks disrupt exports and investment.
• Inflation spikes force monetary tightening.
• Unemployment rises above 12% again in 2026.

Structural & Long-Run Trends

Long-term challenges include skill mismatches, youth unemployment, and regional disparities. Addressing these through education and infrastructure investment is critical to sustainable labor market improvements.

MK’s unemployment rate decline to 11.50% is a positive sign but masks underlying vulnerabilities. Policymakers must balance inflation control with growth support, while accelerating structural reforms. External risks remain significant, requiring vigilant monitoring of geopolitical developments and global market conditions.

Financial markets are likely to remain sensitive to labor data releases, with currency and bond yields reflecting shifts in risk sentiment. The interplay of fiscal discipline and monetary accommodation will shape MK’s economic trajectory in the near term.

Since 2020, the unemployment rate in MK has shown a moderate inverse correlation with the MKD currency. Periods of rising unemployment generally coincide with MKD depreciation against the EUR, reflecting weaker economic fundamentals and reduced investor confidence. For example, the spike to 13% in early 2024 coincided with a 4% MKD depreciation. Conversely, the recent decline to 11.50% has supported modest MKD appreciation, though external shocks limit gains.

Takeaway: MK’s unemployment rate decline to 11.50% reflects steady progress but underscores the need for sustained policy support and structural reforms to ensure durable labor market recovery.