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Analysts say unemployment unlikely to fall into single digits this year

Unemployment is unlikely drop under 10% this year, analysts told MTI following Central Statistics Office's Monday-morning publication of data showing that Hungary's average unemployment rate rose to 11.2% in November 2010-January 2011.

Unemployment rose now for the second three-month period after declining at a slowing rate from Q1 last year.

Zsolt Kondrat of MKB Bank predicted that unemployment would fluctuate between 10% and 11% throughout the rest of the year, adding that the low number of investments and the large degree of excess capacity at companies would prevent unemployment from falling into single digits. The MKB Bank lead analyst said that the government's deficit targets make it unlikely that the public sector will hire additional employees this year.

Kondrat remarked they had expected average unemployment of 11.1% in November 2010-January 2011. The MKB lead analyst noted the big influence of seasonal factors. Unemployment typically rises during the first three months of the year, culminating in March.

Dávid Németh of ING Bank also noted seasonal factors, and predicted that unemployment would be between 10% and 10.5% during the second half of the year, as employment begins to rise in April and the rise will gain momentum in the summer months.

Németh commented that unemployment could be reduced through training of the unskilled labor force.