ZURICH, Oct 7 - Swiss unemployment rose towards its highest level in five years in September, the government said on Tuesday, signalling Switzerland will be unable to count on rising consumer demand as it struggles to climb out of recession. September's jobless rate came in at 3.7 percent, matching expectations, after 3.6 percent in August and compared with a five-year high of 3.9 percent reached in April. But the government cut its forecast unemployment rate for the year as a whole to 3.7 percent from 3.9 percent, providing a ray of hope for the economy which has been hit by weak exports, due to the strong Swiss franc and anaemic growth elsewhere, and flagging consumer sentiment. "The (unemployment) rate will remain at similar levels as currently for the rest of the year because developments have not been as negative as we expected," a spokeswoman for the State Secretariat for Economic Affairs (SECO) said. High jobless rates are likely to have a psychological effect on consumers, especially as economists see no improvement for the rest of the year.
"The number is significant in so far that one cannot expect consumer confidence to improve against this background," said Joachim Schuetz, chief economist at UBS Investment Bank. "It confirms that a...turnaround, which we expect, will not necessarily be driven by private consumption but rather through external factors and investments," he added. The Swiss franc and equities showed no reaction to the data. Economists surveyed by had expected the jobless rate to rise on average to 3.7 percent, with a range of 3.5 percent to 3.9 percent. Economic indicators in recent weeks have given some hope that the economy may be able to recover early next year. Last week the leading KOF think tank said the Swiss economy was set to grow moderately in 2004 after a slight contraction that is widely expected this year.//