Portugal’s Unemployment Rate Drops for Second Quarter to 15.6%

Portugal’s jobless rate dropped for a second quarter, falling to 15.6 percent in the three months through September as the country’s economy shows signs of recovery.

The unemployment rate fell from 16.4 percent in the second quarter and from 15.8 percent in the third quarter of 2012, the Lisbon-based National Statistics Institute said today on its website. That’s the lowest jobless rate since the second quarter of 2012.

The number of unemployed workers from activities including agriculture and fishing dropped 28.6 percent in the third quarter. Jobless workers from industries including manufacturing, construction and energy declined 11.1 percent while the unemployed in services fell 6.6 percent.

While Portugal’s economy expanded in the second quarter for the first time since 2010 as export growth accelerated, Prime Minister Pedro Passos Coelho still has to trim spending by 3.2 billion euros ($4.3 billion) next year to meet budget deficit targets as the government tries to exit its European Union-led bailout program.

Next year’s spending cuts include 1.3 billion euros of savings in personnel costs as the government lowers wages and tries to reduce the number of state workers. Public sector workers in Portugal fell 4.7 percent in the 12 months through June, the Finance Ministry said on Oct. 31. About 10.7 percent of Portugal’s active population worked in the public sector as of June 2013.

Budget Deficit

The government targets a budget deficit of 5.5 percent of gross domestic product for this year and 4 percent for 2014. It expects the shortfall will fall below the EU’s 3 percent limit in 2015, when it aims for a 2.5 percent gap. Portugal’s debt is forecast to peak at 127.8 percent of GDP this year.

The Portuguese government predicts the unemployment rate will climb to 17.4 percent in 2013 and 17.7 percent in 2014. On Oct. 3 it raised the 2014 growth forecast to 0.8 percent from 0.6 percent. It expects the economy will shrink 1.8 percent this year, less than its previous estimate of 2.3 percent.

To contact the reporter on this story: Joao Lima in Lisbon at jlima1@bloomberg.net

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net

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