UPDATE 1-French unemployment hits 11-year high

Wed Oct 26, 2011 1:49pm EDT

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PARIS Oct 26 (Reuters) - The number of jobless people in France rose in September to its highest level since early 2000, after a short-lived respite in August, in more bleak economic news for the centre-right government six months before elections.

Labour ministry data showed the number of registered jobseekers in mainland France jumped by 26,000 to 2.78 million, up 0.9 percent on the month and 3 percent on the year.

It was the highest level since a reading of 2.8 million in February 2000, as France battles to create new jobs in a climate of entrenched economic gloom that looks set to linger until at least the end of next year.

BNP Paribas analyst Dominique Barbet said the rise was in line with steady increases since April, due in part to a rise in the retirement age which increases the activity ratio.

"The unexpected decline in August, although modest, made a correction more likely in September," Barbet said.

"Unfortunately, we do not foresee much improvement because of the economic slowdown," he added.

The monthly labour ministry data is the most frequently reported domestic jobs indicator in France, although it is not prepared according to widely used ILO standards.

Six months from a presidential election at which polls suggest Socialist Francois Hollande could easily defeat President Nicolas Sarkozy, the grim outlook for the job market bodes badly for consumer spending, the traditional engine of French growth.

It is also a blight on Sarkozy's 2007 campaign pledge to create jobs, which was derailed by the global economic crisis, and the government's more recent goal to bring unemployment to below 9 percent by the end of 2011.

Under International Labour Organisation (ILO) accounting, the unemployment rate in mainland France dipped in the second quarter to 9.1 percent from 9.2 percent in the previous three months.

The rate peaked in the wake of the financial crisis at a 10-year high of 9.6 percent in the fourth quarter of 2009.

The figures look set to worsen as the government prepares to cut its 2012 economic growth forecast of 1.75 percent to bring it more in line with analyst estimates at around 1 percent.

In its latest economic outlook the national jobseeking agency, Pole Emploi, forecast that the number of jobseekers would decrease by 5,000 next year if French growth is 1.7 percent after an increase of the same amount this year.

If the economy grows by a lesser 1.4 percent, as the International Monetary Fund has forecast, the number of jobseekers is likely to rise by 12,000, the agency said.

The body that manages France's unemployment insurance, UNEDIC, has painted a gloomier picture, forecasting economic growth of 1.2 percent in 2012 and estimating the number of jobseekers would rise by 55,000.

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