Euro Zone Unemployment Rose to New Record in February as Inflation Eased

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Published: March 1, 2013

PARIS — The unemployment rate in the euro zone edged up in January to a new record, official data showed Friday, as the ailing European economy continued to weigh on the job market.

Unemployment in the 17-nation euro zone stood at 11.9 percent in January, up from 11.8 percent in December, and from 10.8 percent in January 2012, Eurostat, the statistical office of the European Union, reported from Luxembourg.

For the 27 nations of the European Union, the January jobless rate stood at 10.8 percent, up from 10.7 percent in December. All of the figures were seasonally adjusted.

A separate Eurostat report showed price pressures easing in February. In the euro zone, the annual inflation rate came in at 1.8 percent, down from 2.0 percent in January, and below the European Central Bank’s 2 percent target.

The jobless data “suggest that wage growth is set to weaken from already low rates” and further depress consumer spending, which has already been damped by government austerity measures, Jennifer McKeown, an economist at Capital Economics in London, wrote in a research note.

Ms. McKeown noted that the low inflation numbers and high joblessness “should leave the E.C.B.’s policy options open,” and she said it was possible the central bank “might discuss an interest rate cut or other unconventional policies” when its governing council meets on Thursday.

There was a small bit of bright news Friday. A survey of European purchasing managers by Markit, a data and research firm, showed German manufacturing output growing in February for second straight month, as new business levels improved. The composite German purchasing managers’ index improved to 50.3 in February — just above the level that signals growth — from 49.8 in January.

“German industry is clearly rebounding and taking advantage from better external traction,” Gilles Moëc, an economist at Deutsche Bank in London, wrote.

Employment is sometimes seen as a lagging indicator of economic growth, since companies try to avoid adding to their costs until they are convinced that a rebound is at hand. Despite the green sprouts in German industry, there are few signs that recovery is certain. Markit’s overall euro zone purchasing managers’ index was unchanged in February, at 47.9, a level that signals continued contraction.

European unemployment bottomed in early 2008, just as the financial crisis was getting in motion, and has been on a rising trend ever since. The January numbers were the highest since the creation of the euro.

In absolute terms, Eurostat estimated Friday, 19 million people in the euro zone and more than 26 million people in the overall European Union. were unemployed.

Spain’s unemployment rate in January was 26.2 percent, and Portugal’s was 17.6 percent. Austria, at just 4.9 percent, had the lowest rate, followed by Germany and Luxembourg, both of which stood at 5.3 percent.

Greece’s unemployment rate in November, the latest month for which Eurostat has figures for the country, was 27 percent.

France, the second-largest euro-zone economy after Germany, had a 10.6 percent jobless rate in January. In Britain, not a euro member, the jobless rate stood at 7.7 percent.

Those numbers compare with the United States, where the January unemployment rate stood at 7.9 percent. In Japan, 4.2 percent of the work force was counted as unemployed in December.

A version of this article appeared in print on March 2, 2013, in The International Herald Tribune.

 

Link..

http://www.nytimes.com/2013/03/02/business/global/euro-zone-unemployment-rose-to-new-record-in-february-as-inflation-eased.html?_r=0

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