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Higher activity rate positive

Analysts said a rise in labour market activity in January-March seen in fresh data published on Friday was positive, but they noted that many of the added jobs in the economy were in public work programs.

The average unemployment rate in Hungary edged up to 11.7% in January-March from 10.6% in the same period a year earlier, the Central Statistics Office (KSH) said early Friday. 

Takarékbank senior analyst Gergely Suppan said the headline unemployment rate was in line with expectations. He added that, the number of unemployed was up 14,300 on the year but the number of economically active Hungarians climbed by 73,000 during the same period, which shows a favorable trend.

He said the rise in the latter could be the result of tighter retirement conditions and a review of Hungarians on permanent disability. He added that the faster than expected rise in the number of employed was largely the result of public work programs.

Suppan said the unemployment rate could fall to 10.6% in the summer, and he put the average rate for the full year at 11.0%.

Zoltán Török of Raiffeisen Bank also said the rise in the activity rate was positive, but added that these people were being employed in public work programs, as employment in the private sector was not growing.

He noted that the number of people employed part time in the private sector was on the rise, perhaps because employers want to avoid paying the recently raised minimum wage to full time staff.

Török put unemployment rate at 11.4% at year-end.