Portugal’s Unemployment Rate Rises to New Euro-Era Record

Portugal’s jobless rate rose to a euro-era record in the fourth quarter as the country struggles to emerge from a recession headed for a third year in 2013.

The unemployment rate increased to 16.9 percent from 15.8 percent in the third quarter, the Lisbon-based National Statistics Institute said today in an e-mailed statement. That’s the fastest pace in a year. Unemployment averaged 15.7 percent in 2012, up from 12.7 percent in 2011. The government predicts joblessness of 16.4 percent in 2013.

Prime Minister Pedro Passos Coelho is battling rising joblessness as he cuts spending and raises taxes to meet the terms of a 78 billion-euro ($105 billion) aid plan from the European Union and the International Monetary Fund. Portugal has already been given more time to narrow its budget shortfall after tax revenue missed forecasts.

The number of unemployed workers from industries including manufacturing, construction and energy rose 13 percent in the fourth quarter, while the increase from services was 2 percent.

Construction companies’ order books shrank 44 percent in the final quarter of 2012 from the same period a year earlier, Portugal’s Association of Public Works and Construction, or AECOPS, said in a Feb. 4 statement. Cement consumption dropped 27 percent last year to the lowest level since 1973. Unemployment in the industry rose 34 percent in the 11 months through November, it said.

Job Cuts

Banco Comercial Portugues SA, Portugal’s second-biggest bank by market value, said on Nov. 5 it plans to cut 600 jobs.

The Portuguese government projects the economy to return to growth in 2014. It forecasts gross domestic product to drop 1 percent this year after a 3 percent decline in 2012. Economic growth has averaged less than 1 percent a year for the past decade, placing Portugal among Europe’s weakest performers.

The economy shrank for an eighth quarter in the three months through September as the government and consumers reduced spending. The statistics institute releases preliminary fourth-quarter GDP figures tomorrow.

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