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. Last Updated: 07/27/2016

Jobless Rise Shows Recovery Still Fragile

Unemployment unexpectedly rose to its highest in half a year as 42,000 people lost their jobs in December, data showed on Wednesday, underlining the fragility of the economy's recovery.

The data suggests that Russia's upturn from its first recession in a decade will continue to be led by rising global demand for its commodity and energy exports, as domestic demand may well not recover substantially while job cuts continue.

That total number of unemployed rose to 6.2 million — the highest since July, but well off an 8-year peak of 7.1 million set at the height of the country's crisis last February.

The unemployment rate rose to 8.2 percent from November's 8.1 percent, confounding analysts' expectations for a slight fall to 8 percent.

"The increase in unemployment in December is linked to seasonal factors," the State Statistics Service said.

Officials have warned — and analysts agree — that the jobless rate is set to remain elevated for some time to come as companies try to emerge from Russia's recession slicker and more efficient — and thus with fewer employees.

Russian Post is among the companies planning job cuts this year, with some 33,000 postal staff set to be affected.

"The labor market reacts to the recovery with a notable lag," said Yulia Tsepliayeva, chief economist for Russia and the CIS at Bank of America Merrill Lynch.

"I think we will only see a real improvement in unemployment in the second half of this year."

For 2009 as a whole, the jobless rate averaged 8.4 percent — the highest since 2003.

About a third of those unemployed in December have been out of work for over a year, and the problem is more severe in rural areas than in cities, the data showed.

On a regional basis, the highest unemployment — at 56 percent — was registered in Ingushetia, followed by Chechnya with 33 percent. Both are in the North Caucasus, Russia's most violent region where the Kremlin is now looking to economic stimulus to bring about peace.