UPDATE - Turkey's unemployment rate rose to 11.7 pct in March

UPDATES WITH ANALYSTS’ COMMENTS

By Dilara Zengin

ANKARA (AA) - The unemployment rate in Turkey rose 1.6 percentage points in March compared to the same month of last year but fell 0.9 percentage points from the previous month, the Turkish Statistical Institute (TurkStat) announced on Thursday.

The number of jobless in the country age 15 and over increased to 3.6 million in March 2017, a rise of 619,000 from March 2016; the unemployment rate stood at 11.7 percent, a TurkStat statement added.

This was a 0.9 percentage point drop from February 2017, when the national unemployment rate was 12.6 percent.

March's employment rate stood at 46.1 percent, unchanged from the same period last year.

The labor force participation rate was also up by 0.9 percentage points year-on-year, rising to 52.2 percent.

The report said the number of women participating in the workforce climbed 1.3 percentage points from the previous year to 32.9 percent.

- Government measures 'worked'

Commenting on the unemployment rate, analyst Enver Erkan, from KapitalFX, noted how March's rate is higher from the same period last year despite the downward trend from the previous month.

Erkan said that alongside the headline data, the same was true of the non-agricultural and youth unemployment rates.

According to new data, the non-agricultural unemployment rate rose 1.8 percentage points year-on-year to 13.7 percent in March, while the youth unemployment rate -- covering people aged 15-24 -- climbed 4.4 percentage points to 21.4 percent.

"Generally, there is a 20 base point average decline in all seasonally adjusted data sets. The government has been working on support and stimulation to the labour market, in order to bring down unemployment. The lower March rate shows that this worked. We expect unemployment will go below 11 percent thanks to these measures and support," he told Anadolu Agency.

Erkan mentioned how, according to Labour and Social Security Ministry data, 1.2 million new jobs were created in the first 6 months of the year.

The government is currently working on a new employment campaign to boost youth employment, he added.

"In order to make this improvement sustainable, the government should carry out structural reforms for permanent recovery of the labour market. We see the effects of economic growth on the labour market as relatively limited, so unemployment is likely to remain in double digits throughout the year. We currently expect a mean unemployment rate this year of 11.1 percent and year-end unemployment rate of 11.5 percent," he stated.

- Seasonality

Erol Gurcan, research specialist at Gedik Yatirim, pointed to a significant seasonality effect on unemployment rates.

"According to that effect, unemployment starts to decline from the second or third month to the middle of the year, then it starts to increase until the end of the year. So this effect could be considered one of the fundamental reasons for the latest decline on a monthly basis," he explained.

Gurcan also noted a significant increase in the yearly basis despite a decline on a monthly basis.

He said some difficulties such as last year's coup attempt had an impact on the country's economic growth in the second half of last year, and this affected the country's jobless rate.

"Government and the related authorities have taken important supportive measures on general economic conditions since the second half of last year. So the latest unemployment and other economic indicators show that the measures started to take effect," Gurcan said.

"In sum, we believe the worst has passed and we expect to stay on the declining unemployment trend as long as the economic improvement continues," he stressed.

Deniz Cicek, an economist from QNB FinansBank, stated that the sequential improvement in the labor market indicators is consistent with the robust growth performance in first quarter of the year.

"The leading indicators (i.e., PMI, exports) suggest that economic activity continues to increase in the second quarter of the year. Accordingly, the improvement in labor indicators will likely keep up in the forthcoming period. It remains to be seen whether this trend will extend to the second half of the year, where we anticipate a loss of momentum in growth," Cicek added.