8 June 2004, 12:15  Swiss jobless rate falls but rates seen on hold

Swiss unemployment fell in May as the economic recovery continued, but analysts said on Tuesday the surprise drop was unlikely to trigger a rate hike at next week's central bank policy meeting. Unemployment fell to 3.8 percent from 3.9 percent in April on a non-seasonally adjusted basis as the number of registered unemployed fell by 6,245 to 148,816, the State Secretariat for Economic Affairs said. Economists surveyed by on average forecast the data to show the jobless rate stayed flat at 3.9 percent. On a seasonally adjusted basis, the unemployment rate was steady at 3.9 percent, which was expected by economists. "That was a positive surprise...but of course the seasonally adjusted figure stagnated," said Bank Sarasin economist Astrid Frey. "The employment market has already turned. Now we are seeing a slow, modest recovery," Frey added.
The Swiss economy is recovering from a double-dip recession but forward-looking indicators point to a levelling off in the second half of the year. "The fact that the jobless rate is only recovering modestly, is a signal that the SNB does not need to rush to a rate hike," Frey said.
QUARTERLY RATES REVIEW
Despite growing confidence about the shape of the economy, the Swiss National Bank is expected to leave interest rates at near-zero record lows at its quarterly policy review on June 17. Most economists see the central bank raising rates in the second half of the year. The bank has said it will not do so until an economic recovery has taken firm root. EuroSwiss futures price in market expectations of three-month rates of 0.33 percent by end-June , just above the SNB's current target rate of 0.25 percent . But futures price in market rates of 0.77 percent by end-September , rising to 1.20 percent by end-December . Overnight and tomorrow next money was trading at 0.10-0.15 percent, money market dealers said. The Swiss franc nudged higher as continued political and economic uncertainties -- such as fears about terror attacks and high oil prices -- supported the safe haven currency. The dollar was trading at 1.2330/35 francs compared with 1.2351/61 late on Monday in Europe, while the euro was at 1.5210/16 after 1.5229/34. The franc is around 12 month highs against the euro and four month highs against the dollar, another reason seen for the central bank's desire to keep a lid on Swiss rates for now.///

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