Swiss Jobless Rate Rises for First Time in Five Years

By Simone Meier and Joshua Gallu

Oct. 10 (Bloomberg) -- Swiss unemployment rose for the first time in five years in September as a worsening global credit squeeze weighed on economic growth.

The seasonally adjusted jobless rate climbed to 2.6 percent from 2.5 percent in August, the State Secretariat for Economic Affairs in Bern said. That's the first gain since September 2003. Economists expected the jobless rate to remain unchanged, the median of 10 forecasts in a Bloomberg survey shows.

Swiss companies are seeking ways to cut costs after the credit crisis pushed up lending costs, prompting global central banks to cut interest rates to shore up growth. Swiss leading indicators fell in September and manufacturing shrank for the first time in three years. The International Monetary Fund said on Oct. 7 the global economy is headed for a recession in 2009.

``We're feeling the full impact of the global turmoil,'' said David Marmet, an economist at Zuercher Kantonalbank in Zurich. ``It's a crisis of trust given current uncertainties. Companies will curb investment and thus economic growth.''

The Swiss National Bank on Oct. 8 cut its key rate by 25 basis points to 2.5 percent in a coordinated effort with the world's largest central banks to bolster growth. The Zurich- based central bank said the ``recent intensification of the financial crisis'' has augmented ``downside risks to growth.''

Lending Squeeze

Commercial banks are refusing to lend to each other after the U.S. housing slump caused the collapse of New York-based Lehman Brothers Holdings Inc. and forced governments across Europe to bail out banks. SNB President Jean-Pierre Roth said on Oct. 8 that ``further measures are always possible.''

The Swiss government said earlier this month that it still expects the economy to expand 1.9 percent this year and 1.3 percent in 2009. The Zurich-based KOF economic research institute said Sept. 28 the economy will probably contract in the six months through March, adding to the number of jobless.

Swiss companies are already growing more pessimistic. The share of manufacturers forecasting a gain in orders in the current quarter fell to 25 percent from 33 percent in the previous three months, a survey conducted by UBS AG showed yesterday. Thirty-five percent of companies expect a drop in earnings, up from 32 percent in the third quarter.

Tornos SA, Europe's biggest maker of lathes for the watch industry based in Moutier, is cutting working hours to reduce capacity as demand from the auto industry wanes. Zurich-based UBS, the European bank worst hit by the credit crisis, plans to cut its workforce from 25,000 to about 17,000 by year-end.

The unadjusted jobless rate held at 2.4 percent in September, today's report showed. The number of people looking for jobs rose 2,388 last month to 145,937. Companies had 14,132 open jobs in September, up 369 from the previous month.

To contact the reporters on this story: Joshua Gallu in Zurich at jgallu@bloomberg.net; Simone Meier in Frankfurt at smeier@bloomberg.net.