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Eurozone Unemployment Rate Hits Record High

Eurozone Unemployment Rate Hits Record High
4/2/2013 7:37 AM ET

Unemployment in the euro area held steady at a record high in February, raising concerns that the ongoing recession is set to be a prolonged one as the region's debt crisis continues to weigh on economic activity, latest data showed Tuesday.

The seasonally adjusted unemployment rate was unchanged at 12 percent in February, after the January figure was revised upwards from the originally reported 11.9 percent, data from statistical office Eurostat revealed. The latest rate was the highest since euro was launched more than a decade ago.

The February figure also matched economists' expectations. In February 2012, the jobless rate was 10.9 percent.

The Eurozone unemployment rate for those aged below 25 dipped to 23.9 percent from 24 percent in January. However, the figure was higher than the 22.3 percent registered a year ago.

The unemployment figures in the region are expected to climb further in the coming months as governments shed public sector jobs in their austerity efforts. The signs of a prolonged recession are likely to put more pressure on the European Central Bank to cut interest rates in the upcoming rate-setting session on Thursday.

"Despite February's marked deceleration in the rise in unemployment, an overall turnaround in Eurozone labor markets still looks some way off," IHS Global Insight Chief U.K. and European Economist Howard Archer said.

"With Eurozone GDP highly likely to have contracted further in the first quarter of 2013 and prospects for the second quarter looking far from bright, and with business confidence generally relapsing in March, the strong probability is that Eurozone unemployment is headed higher still over the coming months."

The number of unemployed in the currency-bloc increased by 33,0000 month-on-month to around 19.071 million in February. From a year ago, unemployment increased by 1.775 million in the euro area.

Among the member states, the lowest unemployment rates were recorded in Austria, Germany, Luxembourg and the Netherlands, while Greece, Spain and Portugal registered the highest figures.

The jobless rate in the European Union increased to 10.9 percent in February from January's 10.8 percent. The latest figure was higher than the 10.2 percent recorded a year earlier, data showed.

Data compiled by research firm Markit Economics today showed that Eurozone manufacturers reduced their workforces for the fourteenth successive month in March, with steep rates of declines reported in France, Italy, Spain, the Netherlands, Ireland and Greece.

The headline purchasing managers' index, that measures the performance of the manufacturing sector, fell to 46.8 in March from 47.9 in February.

Last week, a report from the European Commission said that economic confidence in the 17-nation currency bloc deteriorated in March, driven mainly due to a marked drop in sentiment in the business sectors. Confidence is forecast to weaken further in the coming months.

"Looking ahead, the business surveys point to a slowdown in employment growth in Germany and continued job cuts of around the recent pace in the euro-zone as a whole," Capital Economics Senior European Economist Jennifer McKeown said.

The February data was gathered much before the Cyprus crisis, which at a time had threatened the future of the euro. The crisis triggered by the Cyprus bailout debacle has given rise to fears that Eurozone's recovery, which had gathered some momentum during the final months of last year, is falling back.

by RTT Staff Writer

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