Today Turkish Statistics Office reported a monthly unemployment rate of 9.8% in August, which was higher than market consensus. The rate was at 9.3% in July. Elsewhere, non-farm unemployment rate jumped to 12.3% from 11.8%, while the labor force participation rate dropped by 0.1 pp to 51,6%. Seasonally adjusted unemployment rate remained at 10.1% and kept on visiting its historic high since October 2010.
Seasonally adjusted data signals that the employment gains a strong presence that despite the slightly acceleration in growth dynamics.
Insufficient contribution of services is the key factor for the recent worrisome trend in unemployment. Considering Turkey’s economic dynamics, job creation has mainly driven by the services.
Our thesis that, for a remarkable breakthrough in the labor market, an annual growth rate higher 5% is needed in Turkey. Ongoing macro structure has no ability create a satisfying number of jobs with a moderate pace growth.