Unemployment rate displays slight drop

Bloomberg

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The rate increased from a revised 11 percent in the same period of last year, the Ankara-based statistics agency said on its Web site Monday. The jobless rate was 16.1 percent in the month-earlier period, the highest since records began in 2005.

Turkey’s economy contracted 6.2 percent in the last quarter of 2008, the first shrinkage in seven years, and may have declined more than 10 percent in the first three months of 2009, according to Central Bank forecasts. The government on June 4 announced plans to provide temporary jobs for 120,000 people planting trees and painting buildings.

Turkey shed 315,000 jobs in services, construction and manufacturing over the past year, while agricultural jobs rose 74,000, the statistics agency said Monday. The number of people in work fell to 20.1 million, while the workforce, which includes those actively seeking jobs, grew by about one million to 23.9 million.

The Central Bank will probably reduce its key interest rate to a new low this week, in what may be the last move in eight months of monetary easing.

The Bank will reduce the rate by quarter of a percentage point to 9 percent, the eighth consecutive decline, according to 16 of 18 economists surveyed by Bloomberg. The other two forecast a half-point cut. The Ankara-based bank will announce its decision at 7 p.m. Tuesday.

Governor Durmuş Yılmaz has slashed 7.5 percentage points from the rate in seven months, trying to soften the impact of the crisis as falling demand sends industrial output and inflation tumbling.

"We’re more interested in signals about whether this will be the end of the cycle than we are in the cut itself," said Erkin Işık, economist for Fortis Bank in Istanbul. "The cuts were already front-loaded and I’d be surprised if they signal there’s more to come."