French Unemployment Drops Unexpectedly, Boosting Macron’s Labor Reforms

French unemployment fell unexpectedly in the second quarter, offering a glimmer of success for President Emmanuel Macron’s controversial labor market reforms, Bloomberg reports.

The jobless rate in France, the euro area’s second-largest economy, dropped to 7.3%, defying economists’ predictions of an unchanged rate at 7.5%.

Macron has made achieving “full employment” a key objective for his second term, which ends in 2027. This recent decline in unemployment serves as a potential measure of the success of his labor reforms.

However, a recent snap legislative election has cast doubt on Macron’s ability to implement future economic policies. The election resulted in a divided parliament with no single group holding a majority, with a leftist alliance emerging as the largest bloc.

This leftist coalition, comprised of Socialists, Greens, and the far-left France Unbowed, has pledged to reverse key legislation, including Macron’s decision to raise the retirement age.

Despite the political uncertainty, Macron has yet to appoint a new prime minister to form a government, stating he will wait until after the Paris Olympics.

The outgoing French Finance Minister, Bruno Le Maire, has warned that the current political standstill is negatively impacting the economy, hindering investment plans for small and medium-sized companies and limiting the caretaker government’s ability to address public finances.

While the overall unemployment rate declined, Friday’s report from Insee revealed that youth unemployment remains more than double the national average, though it did decrease by 0.4 percentage points.

Separate preliminary data indicated a 0.6% increase in wages during the second quarter compared to the previous three months.