Falling unemployment raises recovery hopes

Constuction is one of the sectors that has improved Keystone

Switzerland’s unemployment rate has fallen for the third consecutive month, fuelling hope that the economy is gathering steam.

But experts remain cautious about whether this – along with a rise in consumer confidence – indicates that the country is really on the road to recovery.

The State Secretariat for Economic Affairs (Seco) said on Friday that the jobless rate was down 0.2 per cent to 3.9 per cent last month – more than analysts had expected.

It said the number of registered unemployed was down 5,788 to 155,061 in April and that the number of people looking for work also fell 5,354 to 222,858.

“All the regions of Switzerland were able to profit from the fall in the unemployment rate, except the canton of Graubünden because of the closing of the ski season,” the Seco’s Antje Bertschi told swissinfo.

Analysts had predicted that the jobless rate would fall to 4.0 per cent, after reaching a six-year high of 4.3 per cent in January.

Positive consumers

The figures come a day after Seco announced that consumer confidence was continuing to improve in Switzerland.

Consumer confidence increased by nine points in April, the fourth improvement in as many months. It now stands at –13 points.

However, the indicator – based on an assessment of the general economic situation and household budgets past and present – still remains in negative territory, where it has stagnated since June 2001.

But experts remain cautious as to whether the positive data signal that the Swiss economy is out of the doldrums.

Economists fear the country’s fledgling recovery could be affected by oil prices, currently at their highest level in 13 years.

“If oil prices remain at their current levels, or go even higher, I see a slowing influence on the economic cycle,” said Alois Bischofberger, chief economist at Credit Suisse.

Seasonal factors

The Zurich-based Institute for Business Cycle Research says it expects any growth to be unspectacular.

Last month the institute forecast that Gross Domestic Product would grow by between 1.6 per cent and 1.9 per cent over the coming months.

Spokesman Willy Roth said industry saw a rise in orders in the last half of 2003, while there was a clear stabilisation in the export sector.

But he said this was unlikely to have had a major effect on unemployment.

“The drop in unemployment is due to seasonal factors, in particular in the construction and catering sectors,” Roth told swissinfo.

“The factors affecting the economic upturn will be felt less. They will be perceptible, but we certainly won’t be having a boom like in the 1980s,” he added.

Earlier this week the government repeated its January forecasts of 1.8 per cent growth for this year and 2.3 per cent for next year.

International influence

Stéphane Garelli from the International Institute for Management Development (IMD) in Lausanne says any recovery in Switzerland will be led by the export sector.

“The figures are already good in the United States and even more so in Asia, and we are even feeling some effects in France and Germany,” said Garelli.

“Furthermore, the euro appears to be falling to more reasonable levels compared with the dollar. As a consequence, the Swiss franc is not so expensive,” he told swissinfo.

Also on Friday, the Swiss National Bank announced it would raise interest rates from current record lows when the economy picks up steam.

Governing board member Philipp Hildebrand said the move would keep inflation in check.

swissinfo

In brief

Switzerland, with a jobless total of 4.1% in March and 3.9% in April, is doing better than its European neighbours.

In March 2004, the average unemployment rate for the eurozone was 8.8%. This has risen to 9.9% with the addition of the ten new member countries on May 1.

The countries with the lowest jobless rates are Luxemburg (4.1%), Ireland and Austria (4.5%) and Cyprus and the Netherlands (4.7%).

The highest rates are found in Poland (19%), Slovakia (16.5%) and Spain (11.1%).

In March 2004 neighbouring Italy had a jobless rate of 8.5%, Germany 9.3% and France 9.4%.

In comparison, for the same period the United States had an unemployment rate of 5.7% and Japan 4.7%.