The unemployment rate increased to a seasonally-adjusted 10.2 percent, the highest since the first quarter of 2000, from a revised 10.1 percent in March, Rome-based national statistics office Istat said in a preliminary report today. Economists forecast an increase to 9.9 percent, the median of 10 estimates in a Bloomberg News survey showed. The jobless rate rose to 9.8 percent in the first quarter from 9.1 percent in the previous three months, Istat said.
The economy, in its fourth recession since 2001, will contract 1.5 percent this year before expanding 0.5 percent in 2013, Istat forecast in its annual report May 22. Industrial output probably declined 0.6 percent last month as two earthquakes in the north weigh on Italy’s outlook with “lasting” consequences on production, Rome-based employers lobby Confindustria said in a May 30 note.
“Given the still-deteriorating economic outlook, the private-services sector will struggle to generate any significant number of new employment opportunities,” Raj Badiani, an economist at Global Insight Inc. (2172) in London, wrote in a note. “Public-sector employment at both the central and local government level is likely to shrink as a result of the need to curtail state spending.”
The Rome-based Senate approved yesterday an overhaul of the labor market that includes new rules for hiring and firing workers aimed at boosting growth. The reform passes to the Chamber of Deputies or Lower house for final approval before becoming law.
Labor Minister Elsa Fornero has said the new firing rules should be applied also to civil servants. “We can’t have differences” in the rules for the private and public sectors, she told reporters in Turin on May 24.
Italy’s consumer confidence plunged in May to the lowest in more than 15 years as levies on gasoline prices and tax increases included in Prime Minister Mario Monti’s austerity measures crimped domestic demand. Business confidence also fell this month to the lowest since August 2009, amid concerns the recession which began in the fourth quarter may deepen.
“The unemployment rate has breached the confidence-sapping 10 percent mark sooner than expected, and is yet another significant blow to already fragile consumer confidence,” Badiani said.
Istat originally reported a jobless rate of 9.8 percent in March.
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