16 August 2010 -

Report Summary

No change in unemployment rate in seasonally-adjusted terms In May (April-May-June average), unemployment rate declined to 11.0% from 13.6% of May 2009. This has been the lowest level since October 2008. In fact, seasonally adjusted employment figures published by the TURSTAT has shown that unemployment rate unchanged from April to May. Seasonally adjusted unemployment rate has been announced at 12%, the lowest unemployment rate since October 2008. While agriculture and industry created 423 and 535 thousand new jobs respectively, construction and services added 641 thousand new jobs over a year ago. The recovery in jobless rate continues with additional support from seasonal effects, indicating that economic recovery is creating jobs. Combined with slight movement in capital expenditures front as shown by recent industrial production numbers and industrial turnover index, we expect this trend to continue in seasonally-adjusted terms. With positive seasonality in tourism, agriculture, construction and transportation sectors, unemployment rate may improve further during summer months. We expect the latest employment figures will not affect the dovish policy rate outlook of the Central Bank which has been supported by the benign inflation data of recent months though the CBT announced that it expects a temporary increase in inflation in July and August. We forecast no change for one-week repo rate, which is the new policy rate until the 2nd quarter of 2011.

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