Part of the explanation for this is an increase in female participation and older workers remaining in employment longer than previously. 7 The strong employment growth has reduced unused capacity, which is a positive development, but not in a way that has lowered the unemployment rate. Forward indicators in terms of vacancies and hiring intentions remain positive. GDP growth is expected to pick up.
Other options, such as PPI, GDP deflator and the index of per unit labor cost, are not widely accepted. Second, the calculation of real effective exchange rate has to deal with the time lag and availability of data, and price indices such as the CPI are subject to time lags and comparability.