Jobless rate hits 8.4% in May, 3-year high

Employment Service reports layoffs of 15,600 workers for June, compared with a record of 20,072 in March.

By SHARON WROBEL
July 16, 2009 22:38
2 minute read.

 
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The unemployment rate in May rose to 8.4 percent of the civilian labor force, the highest level in three years, the Central Bureau of Statistics reported Thursday. The economy contracted at 3.7% in the first quarter of the year, it said. Preliminary trend data published by the bureau showed that the rate of unemployment surged to 8.4% in May, compared with 8.2% in April and 7.2% in January. The last time the unemployment rate hit 8.4% was in September 2006, after which the rate dropped gradually to a low of 5.9% last August, just before the start of the global economic crisis. On Wednesday, the Employment Service reported layoffs of 15,600 workers for June, compared with a record of 20,072 in March. It said unemployment numbers were still rising, but at more moderate pace. The Bank of Israel has forecast that the rate of unemployment will rise to 8% by the end of the year, while other economists have said it would be about 9%, which could add another 24,000 unemployed to the current 252,000. "Looking ahead, we will see unemployment continue to rise during the course of the year, reaching about 9% by the end of the year," Gil Bufman, chief economist at Bank Leumi, said Thursday. "We expect the average monthly unemployment rate for this year to stand at 8.1%, due to a sharp drop in the number of employed people not seen since 2003 following the recession and the continued increase in the number of job seekers." The statistics bureau defines an unemployed person as someone who did not work during the surveyed week, actively searched for work during the preceding four weeks, and could have begun to work had a job been offered. In the first quarter of this year the economy contracted at an annual rate of 3.7% in seasonally adjusted terms, after declining 1.5% in the last quarter of 2008, the bureau said Thursday in a separate revised report of GDP figures. "The decline in the growth rate of the economy was driven mainly by a large fall in exports of goods and services and investments into fixed assets, as well as a drop in private consumption," the bureau said. Business-sector product growth contracted at an annual rate of 5.2% in the first quarter of this year, after declining 2.4% in the previous quarter. Exports of goods and services dropped in the first quarter at an annual rate of 29.4%, continuing the sharp decline of 45.2% in the last quarter of 2008. Imports of goods and services were down 40.4% in annual terms, after falling 28.1% in the previous quarter. During the same period, private consumption narrowed at a rate of 3.5% in annual terms, compared with a contraction of 6.1% in the fourth quarter and 1.7% in the third quarter of 2008. In the first quarter of this year, investment in fixed assets plunged at a rate of 15.9% in annual terms, after dropping at a rate of 0.5% in the previous quarter. The fall was led by a decline in investment for machinery and transportation equipment and tools.

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