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Portugal’s Jobless Rate Rises by Most Since Country Joined Euro

Portugal’s jobless rate rose to 14 percent in the three months through December, notching up the biggest increase since the country joined the euro, as the economy contracted for a fifth quarter.

The unemployment rate increased from 12.4 percent in the third quarter -- the sharpest gain since at least 1998 -- and from 11.1 percent in the fourth quarter of 2010, the Lisbon-based National Statistics Institute said today. The number of unemployed workers from industries including manufacturing, construction and energy rose 12.7 percent in the three months, while the increase from services was 12.4 percent.

For 2011 as a whole, the unemployment rate was 12.7 percent, the statistics institute said in an e-mailed statement. The government forecasts unemployment will reach 13.4 percent this year before it starts to decline in 2013.

Prime Minister Pedro Passos Coelho is cutting spending and increasing taxes to meet the terms of a 78 billion-euro ($101 billion) aid plan from the European Union and the International Monetary Fund. As the country’s borrowing costs surged, Portugal followed Greece and Ireland in April in seeking a bailout.

“The rise in unemployment in Portugal was predictable due to the recessive effect of the austerity measures, which affect internal demand and real GDP growth very negatively,” said Ricardo Cabral, an assistant professor at the University of Madeira’s economics department.

Infrastructure Slump

Soares da Costa SGPS SA, Portugal’s third-biggest publicly traded construction company, said in October it plans to continue expanding abroad while cutting jobs at home, where it faces a slump in government infrastructure spending. About 10 building firms file for bankruptcy every day, according to Portuguese construction-industry group AICCOPN.

Portugal’s gross domestic product dropped 1.3 percent in the fourth quarter from the previous three months and declined 2.7 percent from a year earlier, the statistics institute said on Feb. 14.

The Portuguese economy will shrink 3 percent in 2012, the European Commission forecast on Nov. 10. Portugal’s economic growth has averaged less than 1 percent a year for the past decade, placing it among Europe’s weakest performers.

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