09.25.2001
Unemployment breaches 5.0% mark

• Development: The unemployment rate shot up to 5.2% (4.8% seasonally adjusted) in August from 4.9% in July. In the first eight months to August, factory closures rose 31% YoY to 3,711, pushing the jobless rate above the 5.0% level for the first time since 1964.

• Analysis: Historically, August has seen peak unemployment due to seasonal factors. However, this year is expected to be different amid a global slowdown and recent developments affecting global confidence. The government predicts the rate will increase further in September.

• Primasia View: We forecast the average unemployment rate will shoot up to an average of 4.5% in 2001 from 3.0% in 2000, giving the CBC ample room to further cut interest rates. We expect structural problems will keep the jobless rate above trend from here on in.