October 25, 2021

Euro Watch: Euro Zone Unemployment Rose to Another Record in January

That, along with new data showing a decline in inflation in the euro zone, could prompt the European Central Bank to take steps to stimulate the economy when its governing council meets on Thursday, analysts said.

Unemployment in the 17-nation euro zone climbed to 11.9 percent in January from 11.8 percent the previous month, according to Eurostat, the statistical office of the European Union.

For the 27 nations of the European Union, the jobless rate was 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 was 1.8 percent, down from 2 percent in January and below the central bank’s 2 percent target.

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

Ms. McKeown said that the low inflation and high joblessness “should leave the E.C.B.’s policy options open,” and that the central bank “might discuss an interest-rate cut or other unconventional policies.”

There was some bright news on Friday. A survey of European purchasing managers by Markit, a data and research firm, showed that German manufacturing output grew for a second consecutive month in February as new business levels improved.

The composite German purchasing managers’ index rose to 50.3 — just above 50, the level that separates growth from contraction — from 49.8 in January. And the Federal Statistical Office in Wiesbaden reported that German retail sales rose 3.1 percent in January from December, when sales fell 2.1 percent.

Another bit of data this week also supports the view that the German economy will recover from a fourth-quarter slump. The European Commission’s economic sentiment indicator for the euro zone rose to 91.1 in February from 89.5 in January, with German confidence leading the gain.

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

Employment is sometimes seen as a lagging indicator of economic growth because companies try to avoid adding to their costs until they are convinced that a rebound is at hand.

But despite the glimmers of hope in German industry, there are few reasons to regard a recovery as imminent. Markit’s overall euro zone purchasing managers’ index was unchanged in February at 47.9, indicating continued contraction.

Olli Rehn, the European commissioner for economic and monetary affairs, forecast on Feb. 22 that the euro zone economy would shrink 0.3 percent this year, about the same as last year. The bloc’s debt problems, and the tax increases and government spending cuts that have been prescribed as the remedy, have sapped spending power, reducing business demand for labor.

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

Spain’s unemployment rate was 26.2 percent, and Portugal’s was 17.6 percent. Austria had the lowest rate, at 4.9 percent, followed by Germany and Luxembourg, at 5.3 percent each.

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

France, which has the second-largest euro zone economy, after Germany’s, had a 10.6 percent jobless rate in January. Britain, which is not a euro member, had a 7.7 percent rate in November.

That compares with unemployment rates of 7.9 percent in the United States in January and 4.2 percent in Japan in December.

This article has been revised to reflect the following correction:

Correction: March 1, 2013

An earlier version of this article carried a headline that misstated the month of the data. The report was for January, not February. An earlier version of the article also misstated the name of a federal agency in Wiesbaden, Germany. It is the Federal Statistical Office, not the Federal Statistics Office.

Article source: http://www.nytimes.com/2013/03/02/business/global/euro-zone-unemployment-rose-to-new-record-in-january-as-inflation-eased.html?partner=rss&emc=rss

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