The number of people out of work in Switzerland has passed the important psychological barrier of 150,000 for the first time in more than five years.
The latest data means that job fears will continue to drag on Switzerland’s sluggish economy, but analysts are confident the situation will improve by mid-2004.
The State Secretariat for Economic Affairs (Seco) announced on Friday that the number of registered unemployed in October had risen by 4,571 to 151,259. The unemployment rate rose to 3.8 per cent.
“The increase is not as big as we’d anticipated,” said Jean-Luc Nordmann, head of labour affairs at Seco.
October’s better-than-expected figures have enabled the economics ministry to revise the average jobless rate for the year down from the 3.9 per cent previously forecast to 3.7 per cent.
“Unemployment is actually developing much better than we foresaw,” Janwillem Acket, chief economist at Julius Bär private bank, told swissinfo.
October’s increase in the unemployment rate from September's 3.7 per cent had been widely expected, and Seco maintains the situation will continue to worsen, peaking at around 160,000 in January 2004.
Switzerland’s second-biggest bank, Credit Suisse, also painted a bleak picture in a report published last month.
“As a result of staff cuts and company mergers and closures, unemployment may not peak until the early months of next year when it could approach 165,000, equivalent to a jobless rate of 4.1-4.2 per cent,” predicted chief economist Alois Bischofberger.
“This is unlikely to fall significantly over the rest of the year,” he added.
However, Julius Bär is confident the jobs market will improve in the second half of 2004.
“We expect the cycle of growth to begin at the start of 2004. Then it will take at least six months for the unemployment rate to stabilise and hopefully go down,” said Acket.
Job insecurity has undermined consumer confidence, which remains at low levels, according to an economics ministry survey released on Thursday.
Consumer sentiment did improve slightly between July and September, but the economics ministry stressed that shoppers were unlikely to drive an upturn in the export-reliant Swiss economy because of job worries.
"Consumer sentiment is certainly still depressed and this will not change soon," said Credit Suisse economist Thomas Trauth.
Any improvement will be a “slow process”, Acket told swissinfo. “But given the improved outlook, we have enough hope that consumer spending will increase in a better way in the quarters ahead.”
With shoppers expected to keep a watchful eye on their wallets this Christmas, the Swiss National Bank is expected to keep interest rates at record low levels for the coming months to help fuel a recovery.
swissinfo, Samantha Tonkin
Geneva was the worst-hit canton with an unemployment rate of 6.7%.
Jura followed with 5%.
Canton Vaud and Zurich were not far behind with 4.8%.
Neuchâtel's rate stands at 4.5%.
The Italian-speaking canton of Ticino has an unemployment rate of 4.3%.
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