UPDATE - Turkey: Unemployment rises to 11.3 percent in August

UPDATES WITH QUOTES FROM EXPERTS AND ANALYSTS

ANKARA (AA) - Unemployment rose by 1.2 percent in August year-on-year, the Turkish Statistical Institute announced Tuesday.

The number of unemployed persons aged 15 and above rose to 3.49 million in August 2016, which is 435,000 increase from August 2015 figures, pushing the unemployment rate to 11.3 percent, according to the institute.

Unemployment also saw a 0.6 percent jump from the previous month.

The report showed unemployment rose for the fourth month in a row in August after falling to 9.3 percent in April.

July’s employment rate was 46.7 percent, down 0.1 percent from the same period last year, despite the Turkish economy adding 323,000 jobs – an indication that growth in the number of people seeking a job has outpaced job creation.

Turkey’s labor force participation rate surged by 0.5 percent in August year-on-year to 52.6 percent, with the number of people in the labor force totaling 30.96 million, a rise of 759,000 in 2016 compared with the same period the previous year.

The number of women participating in the workforce rose by 1 percent compared to the previous year to 33.1 percent, the report showed. The same rate was unchanged for men, suggesting the overall growth of the labor force participation rate was driven by women.

Erol Gurcan, research specialist at Gedik Yatirim, said there was no surprise in the unemployment rate’s rising trend. "The unemployment rates in August have been increasing by 0.4 percent on average, compared to the figures in July, every year since 2012.

"Besides the seasonal effects, the slowdown of economic activities in the third quarter of this year has also made negative impacts over unemployment rate as the industrial production index fell in the third quarter," Gurcan said.

"The agriculture sector share in the employment decline is 1.2 percent, while industry and construction sectors shares fell by 0.3 and 0.1 percent, respectively compared to the same period of last year; with a 1.6 percent increase of service sector employment share, [there] is evidence of slowdown in economic activities in the third quarter," he added.

Adnan Cekcen, deputy research manager at Destek Yatirim, said although the labor force participation rate of 15 to 64 age group increased from 57.0 percent to 57.7 percent, compared to August, 2015, the unemployment rate saw the highest level since April, 2015, while the unemployment via young population reached 19.8 percent level.

Cekcen said a slowdown in the third quarter’s fundamental figures was expected due to both domestic and external issues. “Seasonal effects plus decline in domestic demand and credit flow may limit the rise in employment rate in the third quarter," he added.

Pointing out a downward trend in the labor market from June to August, KapitalFx Analyst Enver Erkan said the 11.3 percent unemployment rate in August had exceeded their expectations, although their prediction had been double-digit numbers for August and September.

“The slowdown in real economy reflected the labor workforce market. It is likely that the economic growth in the third quarter will be low. Downside risks will weigh on Turkey’s year-end economic growth rate that was forecasted at 3.2 percent. Sectoral figures also confirm the ease off on the economy,” Erkan said.

He said the adverse trend in the labor market will maintain in September and the fourth quarter.

“We might expect that the unemployment rate will be at above 11 percent even further, it can head towards 12 percent. The average unemployment rate might stand at 10.8 percent in 2016,” he added.