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Analysts see little chance of improving jobless rate

Hungary's jobless rate could stagnate this year, analysts told MTI on Monday, after fresh data showed the unemployment rate averaged 10.8pc in May-July, unchanged from April-June. They noted the employment numbers rose, reflecting a rise in the activity rate.

Gyorgy Barta, chief analyst for CIB Bank, told MTI the unemployment rate could be at 10.8pc at the end of the year too, just like last year. Public work programs could bring a small improvement in 2012, but government measures to bring Hungarians on disability pension back to the workplace could cause the rate to deteriorate as some of these people are likely to register as unemployed, he added.

TakarekBank senior analyst Gergely Suppan said the higher than expected unemployment rate in May-July was the result of the growing number of "economically active" Hungarians, the result of stricter rules for taking early retirement, but the figure may also have been lifted by new graduates entering the workplace. The jobless rate could climb further in the coming months, even reaching 11pc, he added.

Mr Suppan put the average annual unemployment rate at 10.9pc for 2011 and 10.5pc in 2012.

Concorde Ertekpapir's Janos Samu noted that although employment numbers rose in May-July, productivity did not improve. The jobless rate could fall to 10.4pc by the end of summer, but seasonal effects could bring it back up to 11pc by the beginning of next year, he added. He put average annual unemployment at 10.9pc in 2011 and at 10.5pc in 2012.

The government targets a 2.94% of GDP general government deficit, excluding one-off items such as pension fund transfers, for 2011. It projected 3.1% GDP growth in its latest Convergence Program update.