Portugal’s Unemployment Rate Climbs to Record for Euro Era

Portugal’s jobless rate rose to a euro-era record of 17.7 percent in the three months through March as the country’s economy contracts for a third year.

The unemployment rate increased from 16.9 percent in the fourth quarter and 14.9 percent in the first quarter of 2012, the Lisbon-based National Statistics Institute said today in an e-mailed statement. The number of unemployed workers from industries including manufacturing, construction and energy rose 3.6 percent in the first quarter, while the increase in services was 4.1 percent.

Prime Minister Pedro Passos Coelho is battling a deepening recession as he cuts spending and raises taxes to meet the terms of a 78 billion-euro ($103 billion) aid plan from the European Union and the International Monetary Fund. Coelho proposed spending cuts on May 3 that include reducing the number of state workers as the government tries to meet budget deficit targets.

The government announced less ambitious targets on March 15 for narrowing its deficit as it predicted the economy will shrink twice as much as previously estimated this year. It projects gross domestic product will contract 2.3 percent before growing 0.6 percent next year. Officials forecast the unemployment rate will climb to 18.2 percent in 2013 and 18.5 percent in 2014.

Ninth Quarter

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 a ninth quarter in the three months through December as consumer spending fell and exports dropped with the euro-area recession.

Construction companies are suffering from record-low demand for new projects after their order book fell 44 percent in the last quarter of 2012 from 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, AECOPS said.

Banco Espirito Santo SA, Portugal’s biggest bank by market value, plans to cut 200 jobs in 2013, Chief Executive Officer Ricardo Salgado said on May 7.

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