Good news: Unemployment suddenly hits the brakes

The indicator the entire business sector keeps its eyes on to see where the economy is going, stagnated in March when the unemployment rate only went up by 0.06% to 8.36%. Every month of the past year had added 0.2% to 0.4% to the unemployment rate, that is several tens of thousands of people who lost their jobs.

Even though March came with a new high in terms of unemployment, the trend is for it to stabilise.

“One can see a slowdown in the rise in unemployment, indeed, although the trend remains upward,” comments Ionut Dumitru, Raiffeisen’s chief economist.

The main explanation for the stabilisation of the unemployment rate increases is that the private sector companies have completed most of their restructuring operations, after having slashed jobs last year, which resulted into more than 300,000 new unemployed people in 2009.

“As for the private environment, those that resorted to extensive layoffs completed them last year. Private companies were quick to react, cutting costs when sales plunge is a matter of survival,” says Dumitru, who adds that the private sector will no longer make a significant contribution to the rise in unemployment this year.