Swiss Unemployment Rises as Companies Cut Payrolls

By Joshua Gallu

Nov. 7 (Bloomberg) -- The number of people unemployed in Switzerland rose in October as a gloomy outlook for the world economy prompted companies to scale back their payrolls.

The seasonally adjusted number of people without jobs increased by 1,204 to 102,319 from September, the State Secretariat for Economic Affairs in Bern said today. The jobless rate held at 2.6 percent, in line with the median of 14 economists' forecasts in a Bloomberg News survey.

Swiss companies may pare their workforces further in coming months as the financial-market crisis pushes up lending costs and a global slowdown hits order books. Swiss leading indicators declined to the lowest in more than five years in October. The Swiss central bank yesterday unexpectedly trimmed borrowing costs to counter a deepening economic slowdown.

``The Swiss labor market is still rather robust, but of course that won't last,'' said Dirk Faltin, a senior economist at UBS Wealth Management Research in Zurich in an interview with Bloomberg Television. The Swiss National Bank's decision to lower the key rate ``was the right signal in this situation.''

The SNB yesterday trimmed its three-month Libor target by 50 basis points to 2 percent, the biggest cut in more than five years, after the Bank of England lowered borrowing costs more than economists expected by 150 basis points. The European Central Bank yesterday cut its key rate by 50 basis points.

The Zurich-based SNB said that the economic outlook has ``deteriorated more severely than anticipated'' and the Swiss economy may fail to grow in 2009. The International Monetary Fund yesterday predicted economic contracts in the U.S., Japan and the economy of the 15 euro nations next year.

Adding to signs of slowdown, Swiss manufacturing contracted for a second straight month in October and exports declined for the first time in almost four years in September.

Clariant AG, the world's biggest maker of chemicals, is cutting 2,200 jobs, or 10 percent of its workforce, through 2009 as it seeks to boost profitability. The Muttenz, Switzerland-based company said Nov. 4 it will need to cut costs further as slumping automotive and construction industries and slowing growth in China hurt revenue.

The unadjusted jobless rate rose to 2.5 percent in October from 2.4 percent in the previous month partly as weather-sensitive industries such as forestry and agriculture reduced their workforce. The number of open jobs increased by 369 to 14,132 from September, today's report showed.

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