Swiss July Unemployment Rate Holds at Six-Year Low

By Joshua Gallu

Aug. 8 (Bloomberg) -- Swiss unemployment fell in July as new orders from Asia prompted manufacturers to hire, keeping the jobless rate at the lowest level since 2002 for a sixth month.

The seasonally adjusted number of unemployed decreased by 110 to 99,819, the State Secretariat for Economic Affairs in Bern said today. The jobless rate was unchanged at 2.5 percent, matching the median forecast of 15 economists in a Bloomberg News survey.

Swiss companies are boosting their workforces as emerging- market countries post new orders for machines and power grids. Orders from China and India are spurring companies like Zurich- based ABB Ltd., the world's biggest builder of power networks, and Winterthur, Switzerland-based Sulzer AG, the world's second- largest maker of pumps, to step up production.

``This is more or less full employment,'' said David Marmet, an economist at Zuercher Kantonalbank in Zurich. ``Companies are still saying they need workers, but the qualifications of the job seekers don't match the needs of the jobs being advertised. The adjusted rate probably can't go any lower.''

Swiss companies are reporting a ``pronounced shortage of skilled workers'' and ``recruitment difficulties'', the Swiss National Bank said in a report published July 3, citing a survey.

Without adjusting for seasonal changes, the number of people unemployed in Switzerland totals 92,163. Of these, 56,229 have been without work for between 1 month and half a year, while just 15,180 have been jobless for more than one year.

Wages, Prices

The average pay increase across 21 branches of the economy is 2.2 percent this year. Inflation accelerated to 3.1 percent in July, the fastest pace in almost 15 years and more than economists expected, led by rising energy costs.

The central bank, which left interest rates unchanged at its last policy meeting in June, faces a dilemma as it tries to balance the risk of inflation against slower economic growth.

Swiss companies from banks to industrial producers may scale back their workforces in the coming months as a U.S.-led global economic slowdown threatens earnings and foils expansion plans. UBS, the European bank with the highest losses from the subprime crisis, is cutting 200 jobs in Switzerland as part of a plan to eliminate 5,500 jobs across the company.

Factory Jobs

A gauge measuring employment growth in Switzerland's manufacturing sector dropped to the lowest level since April 2006 last month, a survey showed. The measure indicates job growth will slow in the coming months. The number of registered open jobs fell by 632 from the month before, today's release showed.

``It's still too early for slowing growth to affect the labor market,'' said Reto Huenerwadel, senior economist at UBS AG in Zurich. ``The momentum is going to shift. Sometime in the second or third quarter of next year we'll see the effect of slowing growth on the labor market.''

Switzerland's economic expansion slowed to 0.3 percent in the first quarter from the fourth, the weakest pace in 3 1/2 years, as sales abroad declined and companies curbed construction spending. The Swiss economy will probably expand between 1.5 percent and 2 percent this year after growing by 3.1 percent last year, according to the central bank.

To contact the reporters on this story: Joshua Gallu in Zurich at jgallu@bloomberg.net