UPDATE 1-Portugal Q3 unemployment rises to 10.9 pct

* Highest in at least two decades

* Jobless up despite higher growth

* Treasury bill yields jump at auction

(Adds economists, background)

LISBON, Nov 17 (BestGrowthStock) – Portugal’s unemployment rate rose
to 10.9 percent in the third quarter from 10.6 percent in the
previous three months and economists saw no prospect of an
improvement soon as the country struggles with a debt crisis.

With tough austerity measures due to bite next year and the
country fending off the impact of Ireland’s debt woes, the
jobless rate has risen from 9.8 percent a year ago, reaching the
highest levels since the 1980s.

Unemployment rose in the quarter despite a pick up in
economic growth, official data showed. Analysts say an
improvement in growth is crucial if Portugal is to get its
levels of public debt down and prevent it from eventually
following Greece and possibly Ireland in needing foreign aid.

“The employment figures show that, despite the better than
expected national account figures for the third quarter, the
labour market remains very weak,” said Diego Iscaro, an
economist at IHS Global Insight.

“This will continue to put consumers — which are already
being hit by rising inflation, higher taxes and lower public
spending — under significant pressure.”

Portugal’s gross domestic product expanded 1.5 percent in
the third quarter form a year earlier. But as the country
introduces more austerity next year to meet budget goals many
economists say the country could dip back into recession.

Paula Carvalho, an economist at Banco BPI, said she expects
GDP to contract 1.1 percent next year, pushing the jobless rate
to 11.2 percent.

She said Wednesday’s data showed that “probably we won’t
have any relief in the job market soon.”

Portuguese risk premiums hit euro lifetime highs last week
on growing concerns over Portugal’s budget deficit and contagion
from Ireland.

The government is aiming to cut the budget gap to 4.6
percent of GDP next year from 7.3 percent in 2010.

Showing the country’s challenges, the IGCP debt agency on
Wednesday issued 750 million euros in one-year treasury bills at
a sharply higher rate of 4.813 percent compared with 3.260
percent at the beginning of the month.

The National Statistics Institute said the number of
unemployed rose 11.3 percent in the third quarter from a year
earlier to 609,400 people, INE said.

In the second quarter of this year the jobless rate stood at
10.6 percent.

(Reporting by Axel Bugge; editing by Patrick Graham)

UPDATE 1-Portugal Q3 unemployment rises to 10.9 pct