Bloomberg News

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

May 16, 2012

Portugal’s jobless rate rose to a new euro-era record in the three months through March as the country’s economy contracted for a sixth quarter.

The unemployment rate increased to 14.9 percent in the first quarter, the highest since at least 1998, from 14 percent in the fourth quarter and 12.4 percent in the first quarter of 2011, 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 5.3 percent in the first quarter, while the increase in services was 5.9 percent.

Prime Minister Pedro Passos Coelho is battling a recession as he cuts spending and increases taxes to meet the terms of a 78 billion-euro ($99 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 requiring a bailout last year.

For all of 2012, the government forecasts unemployment will rise to 14.5 percent before declining to 14.1 percent in 2013. The jobless rate was 12.7 percent in 2011.

The economy may contract 3.3 percent this year before expanding 0.3 percent in 2013, the European Commission forecast on May 11. Portuguese economic growth has averaged less than 1 percent a year for the past decade, placing it among Europe’s weakest performers.

Economy Shrinks

Portugal’s gross domestic product declined 0.1 percent in the first quarter from the previous three months and dropped 2.2 percent from a year earlier, the statistics institute said yesterday in a preliminary report.

Mota-Engil SGPS SA, Portugal’s biggest construction company, plans to counter the recession at home by expanding abroad, Chief Executive Officer Jorge Coelho said on Feb. 6.

About 200 construction workers lose their jobs each day, Manuel Reis Campos, head of Portuguese construction industry group AICCOPN, said on Jan. 24. About 10 building companies file for bankruptcy every day, according to Reis Campos.

Portuguese car sales may drop 18.5 percent this year from 2011, according to a forecast by the Portuguese Automobile Association. An estimated 2,600 companies in the auto industry may close in 2012, with 21,000 job losses, ACAP said.

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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