UPDATE - Turkey's unemployment rate rises to 10.5 percent

UPDATES WITH ANALYSTS’ COMMENTS

By Dilara Zengin and Tuba Sahin

ANKARA (AA) - The unemployment rate in Turkey rose 1.2 points to 10.5 percent in April compared to the same month last year, the Turkish Statistical Institute (TurkStat) announced Monday.

The number of jobless aged 15 and over in the country jumped to 3.3 million, a rise of 463,000 on April last year, TurkStat said in a statement.

However, April’s figures showed a 1.2 percentage point drop from the previous month, when unemployment stood at 11.7 percent.

April's employment rate was unchanged from the same period last year at 47.2 percent.

Labor force participation increased by 0.7 percentage point year-on-year to 52.7 percent.

The TurkStat report revealed that the number of women in the workforce rose 0.8 percentage points from the previous year to 33.4 percent.

-Unemployment beat forecasts

Commenting on the news, Enver Erkan, an analyst at KapitalFX, said that April’s unemployment rate fell below the market and analyst forecasts of 11 percent and 10.7 percent, respectively.

"We see two main contributors to labor market conditions in Turkey,” he added. “Firstly, after the strong economic growth in the first quarter of 2017, we see the leading indicators of the second quarter affecting economic growth positively."

Turkey's economy grew 5 percent in the first quarter of 2017, according to TurkStat data released on June 12.

Erkan added that they expect the strong growth momentum to continue and have a positive effect on the labor market.

"Secondly, [we see] the results of policies to stimulate labor market. As a result of labor campaigns, new hiring rose and had a marginal effect on the unemployment rate. But the main contributor should be seen as the stronger GDP growth outlook for the second quarter," he explained.

Erkan said that a single-digit unemployment rate could be seen in the next two months.

"This is mainly because of the effects of seasonality of the early summer. But a decline to single digits seems more difficult for the annual average numbers. We see the average 2017 unemployment rate as 11 percent," he added.

Muammer Komurcuoglu, an economist at IS Investment, said the monthly decline in unemployment was limited despite strong economic activity and ongoing employment incentive packages.

“For the rest of the year we expect unemployment to fall gradually, but we are far from a significant improvement in employment conditions unless we see additional measures,” he added.