UPDATE - Turkey's unemployment rate falls to 10.6 percent

UPDATE WITH COMMENTS FROM ANALYSTS

By Dilara Zengin and Tuba Sahin

ANKARA (AA) - The unemployment rate in Turkey decreased 0.7 point to 10.6 percent in September, compared to the same month last year, the Turkish Statistical Institute (TurkStat) announced Friday.

The number of unemployed people, aged 15 and above declined to 3.4 million this September, a decrease of 104,000 from last September, when the unemployment rate stood at 11.3 percent, the statement said.

The rate was the same as in August, according to TurkStat.

The fall came after Turkey’s gross domestic product (GDP) grew by 11.1 percent in the three months to Sept. 30 when compared to the same period last year, beating expectations of the world’s leading economists.

September's employment rate rose by 1.1 percentage point, from the same period last year, to 47.9 percent.

The labor force participation rate was also up by 0.8 percentage point year-on-year, going up to 53.6 percent.

The number of women participating in the workforce climbed 1 percentage point from the previous year to 34.5 percent.

KapitalFX Analyst Enver Erkan said Turkey threw caution to the wind on whether this would turn into a trend of lower unemployment rates.

"Unemployment in the youth population still remains at 20 percent. We see some decline in seasonally adjusted indicators, but it must show a larger decline with these GDP growth numbers," said Erkan.

Erkan noted that the government expected a 10.8 percent unemployment rate for this year and 10.5 for 2018.

"This means single digit is not expected yet," he added.

"Economic growth is way high, it is not possible to reveal productivity growth, so unemployment rate will decline very slowly in the next three to four years," Erkan said.

Muammer Komurcuoglu, an economist at IS Investment, also underlined the rise in the labor force participation rate had limits on the decline of the unemployment rate despite Turkey's third quarter strong growth.

The bad news is that employment generated in manufacturing is very limited, Komurcuoglu said.

He added that a moderate fall in unemployment rate was​ expected for the rest of the year.

"Yet, we are still far away from a strong fall in the unemployment rate," Komurcuoglu said.