Improved job figures trigger revised Swiss outlook

Statistical reports released by the federal government on Monday radiated positive vibes for the Swiss economy and prompted some analysts to wonder whether a more upbeat forecast may be in order for 2010.

Figures from the government’s secretariat of economic affairs (Seco) showed unemployment at the end of February stood at 4.4 per cent, down from 4.5 percent in the previous month.

The reduction snapped a nine-month streak of ever-increasing jobless numbers and came in the face of widespread predictions calling for the situation to continue deteriorating.

“The figures were surprisingly good,” Bank Sarasin chief economist, Jan Poser, told Swisster.

Poser admitted he was reconsidering his economic forecast for the country in light of the employment figures.

“We’ve reached the low point of the labour market,” he said.

Economists have widely seen rising unemployment this year as a drag on consumer spending, which accounts for almost two-thirds of  Switzerland’s Gross Domestic Product.

In total, 236,000 people of working age were without jobs at the end of last month.

But numbers adjusted for seasonal differences show the unemployment rate levelling off at 4.1 per cent.

They follow a better than expected start to the year.

“The January unemployment data have already been a major positive surprise," UBS economist Reto Huenerwadel said in a note to clients on Friday.

Poser said his analysis of unemployment bottoming out is based on precedents from other recessions he has analysed.

“The typical pattern remains in place...The law holds that six months after a recession the labour market returns to life,” he said.

Among the encouraging signs, unemployment amongst younger workers dropped by 3.7 per cent in February.

Seco said there were nearly 15,000 advertised vacancies, a quarter of which are in the canton of Zurich.

But the employment picture compares badly with the situation a year ago, with a 30 percent increase in those without work from February 2008.

And the government said around 40,000 people were subject to reduced working hours in December.

Geneva remains the worst-hit canton with 7.4 percent out of work, closely followed by Neuchâtel, with a rate of 7.2 percent. At the other end of the scale, Uri and Appenzell-Ausserhoden recorded a 1.6 percent rate.

If Poser holds one key reservation about the employment figures, it is that the number of short-shift workers has increased.

Companies may ditch some of these workers if the economy sours towards the middle of the year, the economist said.

Some sectors are suffering more than others.

More than 11 percent of hospitality and restaurant industry workers are job seekers. And the federal government on Monday released more data showing the tourism industry is continuing to suffer from the global downturn.

The statistics department said the number of overnight stays in Swiss hotels fell 2.6 percent in January to 2.8 million from the same month in 2009.

The construction industry has fared better than other sectors in the past year but despite this more than a tenth of builders were out of work last month.

The number of new buildings in the last three months of 2009 was a little higher than that of the end period of 2008. But over the course of the year, the construction industry witnessed a decline of four percent in new units completed, resulting in a figure of 39,410.

The federal government’s quarterly statistics offer little evaluation of what has driven the decrease and whether better results towards the end of the year indicate a broader economic recovery.

Housing and planning policy “differs from one canton to another...and across municipalities,” said a spokesperson for the buildings and dwellings section of Swiss statistics.

“We’re only collecting data...we’re not analysing why” – a job which “is up to the private sector”, according to the spokesperson.

Figures for uncompleted constructions are more positive, showing that at the end of December 2009, 63,540 dwellings were under construction, corresponding to an increase of more than 12 per cent year-on-year.

The new build figure was up 16.3 percent, compared with the fourth quarter of 2008, in Geneva, where residents often complain of housing and rental property shortages.

But a 22 percent year-on-year drop in new buildings in Bern means the capital has less new space to offer residents.

Higher high street and shopping centre sales are further indicators that the economy may be stabilising.

Retail sector sales rose by 4.4 per cent in January 2010 compared with January 2009, although this figure is revised to 0.1 per cent when adjusted for seasonal quirks.

Although the construction sector and resilient consumption levels helped limit the recession in Switzerland, Poser cautioned that “these are not leading indicators...retail sales are always volatile.”

Bank Sarasin has one of the more bullish outlooks for this year, predicting economic growth to hit 1.9 per cent in 2010.

But with a below-consensus forecast of 0.9 per cent for 2011, the Basel-based private bank expects the economy recovery to drop off in the medium term.

Bern said last week that the country’s gross domestic product (GDP) had grown by 0.7 per cent in the fourth quarter of 2009, compared with the previous three months.