French unemployment rose in the second quarter to its highest level in three years, data showed on Thursday, and Economy Minister Christine Lagarde said it would get worse before economic recovery reaches the labour market. The quarterly jobless rate, according to International Labour Organisation standards, rose to 9.5 percent in the second quarter from a downwardly revised 8.9 percent in the first quarter, national statistics office INSEE said.
That was the highest since the first quarter of 2006, when unemployment also stood at 9.5 percent. It underlined worries that weak consumer spending may threaten a nascent recovery, and that conditions could worsen significantly once temporary government aid runs out. In mainland France, which excludes overseas territories, the unemployment rate climbed to 9.1 percent from 8.5 percent in the first quarter.
"The deteriorating trend in the labour market should continue for several quarters, because even a gradual recovery in business will not lead to an immediate fall in unemployment," Lagarde said in a statement. Young French were hardest-hit by the rise in unemployment, INSEE said. Among 15 to 24-year-olds in mainland France and its overseas territories, the jobless rate rose to 24.6 percent from 23.1 percent in the previous quarter.
Earlier this week, monthly euro zone data showed that unemployment in the 16-country area hit a 10-year high of 9.5 percent in July. French unemployment rose to 9.8 percent in July, the data from European Union statistics office showed. Olivier Gasnier, economist at Societe Generale, said the data was in line with expectations. But he was positively surprised by the downwards revision of first-quarter figures, which opened up the possibility that mainland France would not see an unemployment rate of 10 percent at the end of the year.
"The big question is whether this will last," he said. Gasnier pointed out that government measures to boost short-term employment and plans for public works projects had helped to prop up economic numbers. Many companies had delayed decisions on job cuts until after the summer to see whether business would pick up, he said. "Despite the strong improvement we've seen in all the indicators, when we scratch that a bit we find nevertheless that it has a lot to do with the fall in stocks and especially the aid for the car sector," he said.