November 14, 2019 / 7:04 AM / 2 months ago

French unemployment rate edges higher to 8.6% in third quarter

PARIS (Reuters) - French unemployment nudged unexpectedly higher in the third quarter, official data showed on Thursday, although recent strong job creation has offered hope that a long-term downward trend remains intact.

The INSEE official statistics agency said the unemployment rate rose to 8.6% of the workforce in the third quarter from 8.5% in the previous three months, the lowest since late 2008.

A Reuters poll of 10 economists had forecast on average that the rate would keep declining, as it had in previous quarters, to 8.4%. None had forecast an increase.

The rise in the unemployment rate comes even though the euro zone’s second biggest economy has managed to keep steadily adding new jobs despite a deteriorating international economic outlook.

Meanwhile, jobless claims have also been falling steadily, hitting the lowest level in five and a half years in the third quarter.

The increase in the jobless rate took INSEE by surprise as it had forecast unemployment would keep falling steadily through the year, especially given the economy has created a bumper 200,000 new jobs so far in 2019.

Since the number of unemployed people only rose by 10,000 in the third quarter, one INSEE official said it was not impossible that the increase was statistical noise.

Labour Minister Muriel Penicaud said the increase was not a reversal of the downward trend and that it was important to keep a long-term perspective.

“We never said that the battle to boost jobs would be easy. Thirty years of mass unemployment doesn’t go away in a day,” Penicaud said on Europe 1 radio.

Yet even though the increase in unemployment remains small, it still marks a setback for President Emmanuel Macron as the improving labour market had been the strongest sign yet that his economic reforms are having an impact.

So far this year France’s economy has been outperforming the broader euro zone, repeatedly chalking up firm growth while more export-dependent Germany teeters on the brink of recession.

Labour market gains have been key to France’s economic success this year, with domestic demand boosted by tax cuts offsetting weakness from major trade partners such as Germany.

Reporting by Leigh Thomas and Mathieu Protard; Editing by Sudip Kar-Gupta and Gareth Jones

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