June 28, 2017

Joblessness Edges Higher To Hit a Euro Zone Record

The jobless rate in the 17 countries that belong to the euro zone was 12.1 percent in May, adjusting for seasonal effects, according to a report from Eurostat, the European Union statistics agency. That figure compared with 12 percent in April, which was revised down from 12.2 percent reported earlier. Based on the revised figures, May unemployment was at a record high.

Eurostat estimated that 19.2 million people in the euro area were jobless in May, an increase of 67,000 from April. For all 27 countries in the European Union, the unemployment rate was unchanged at 10.9 percent. The European bloc expanded to 28 countries on Monday when Croatia officially joined.

Joblessness in the euro zone has been rising almost without interruption since early 2008, when the financial crisis began, declining only briefly at the beginning of 2011. And analysts see little prospect for a sustained decline anytime soon.

While economists expect the euro zone economy to stabilize in the course of this year, growth will most likely remain too slow to generate large numbers of jobs.

“The measure that offers the greatest potential for job creation in the short to medium term is an easing of credit conditions,” Marie Diron, an economist who advises the consulting firm Ernst Young, said in a statement. “This would allow companies to invest and as a result recruit in the euro zone.”

The European Central Bank will hold its monetary policy meeting on Thursday, but it is not expected to introduce more stimulus to the euro zone economy. A cut in the benchmark rate, to 0.25 percent from a record 0.5 percent, is possible, but many say it would be unlikely to do much to encourage lending in troubled countries like Spain and Italy.

Banks in those countries are trying to cope with rising numbers of bad loans and are reluctant to lend no matter how cheaply they can borrow from the European Central Bank. And the central bank remains reluctant to effectively print more money, as the Federal Reserve in the United States and Bank of England have done, because of opposition from Germany to more aggressive action.

Eurostat also reported on Monday that inflation in the euro zone rose to 1.6 percent from 1.4 percent because of a surge in energy prices. While inflation remains below the central bank’s target of about 2 percent, the uptick is likely to provide a further argument against increasing the benchmark interest rate.

Compounding the bank’s challenge, the numbers released showed that there remained a big difference in economic performance among euro zone countries. These differences make it difficult for the central bank to form a monetary policy that is appropriate for all members.

Unemployment rates in Spain and Greece were about 27 percent in May, with youth unemployment remaining well above 50 percent. In contrast, unemployment in Austria was 4.7 percent and in Germany was 5.3 percent. Both had youth jobless rates below 9 percent.

If there was any good news, economists said, it was that unemployment may not go up much more. “An end to the euro zone labor market downturn is not yet imminent,” Martin van Vliet, an economist at ING Bank, said in a note to investors. “However, with the recession across the euro zone petering out, the peak in unemployment should not be too far away, either.”

Article source: http://www.nytimes.com/2013/07/02/business/global/euro-zone-joblessness-rises.html?partner=rss&emc=rss

Joblessness Edges Higher to Hit a Euro Zone Record

The jobless rate in the 17 countries that belong to the euro zone was 12.1 percent in May, adjusting for seasonal effects, according to a report from Eurostat, the European Union statistics agency. That figure compared with 12 percent in April, which was revised down from 12.2 percent reported earlier. Based on the revised figures, May unemployment was at a record high.

Eurostat estimated that 19.2 million people in the euro area were jobless in May, an increase of 67,000 from April. For all 27 countries in the European Union, the unemployment rate was unchanged at 10.9 percent. The European bloc expanded to 28 countries on Monday when Croatia officially joined.

Joblessness in the euro zone has been rising almost without interruption since early 2008, when the financial crisis began, declining only briefly at the beginning of 2011. And analysts see little prospect for a sustained decline anytime soon.

While economists expect the euro zone economy to stabilize in the course of this year, growth will most likely remain too slow to generate large numbers of jobs.

“The measure that offers the greatest potential for job creation in the short to medium term is an easing of credit conditions,” Marie Diron, an economist who advises the consulting firm Ernst Young, said in a statement. “This would allow companies to invest and as a result recruit in the euro zone.”

The European Central Bank will hold its monetary policy meeting on Thursday, but it is not expected to introduce more stimulus to the euro zone economy. A cut in the benchmark rate, to 0.25 percent from a record 0.5 percent, is possible, but many say it would be unlikely to do much to encourage lending in troubled countries like Spain and Italy.

Banks in those countries are trying to cope with rising numbers of bad loans and are reluctant to lend no matter how cheaply they can borrow from the European Central Bank. And the central bank remains reluctant to effectively print more money, as the Federal Reserve in the United States and Bank of England have done, because of opposition from Germany to more aggressive action.

Eurostat also reported on Monday that inflation in the euro zone rose to 1.6 percent from 1.4 percent because of a surge in energy prices. While inflation remains below the central bank’s target of about 2 percent, the uptick is likely to provide a further argument against increasing the benchmark interest rate.

Compounding the bank’s challenge, the numbers released showed that there remained a big difference in economic performance among euro zone countries. These differences make it difficult for the central bank to form a monetary policy that is appropriate for all members.

Unemployment rates in Spain and Greece were about 27 percent in May, with youth unemployment remaining well above 50 percent. In contrast, unemployment in Austria was 4.7 percent and in Germany was 5.3 percent. Both had youth jobless rates below 9 percent.

If there was any good news, economists said, it was that unemployment may not go up much more. “An end to the euro zone labor market downturn is not yet imminent,” Martin van Vliet, an economist at ING Bank, said in a note to investors. “However, with the recession across the euro zone petering out, the peak in unemployment should not be too far away, either.”

Article source: http://www.nytimes.com/2013/07/02/business/global/euro-zone-joblessness-rises.html?partner=rss&emc=rss

Euro Zone Joblessness Rises

FRANKFURT — Unemployment in the euro zone continued its steady rise in May, according to data published Monday, underscoring the human effects of a downturn that has lasted a year and a half.

The jobless rate in the 17 countries that belong to the euro zone was 12.1 percent in May, adjusting for seasonal effects, the report from Eurostat, the European Union statistics agency, said. That figure compared with 12 percent in April, which was revised down from 12.2 percent reported earlier. Based on the revised figures, May unemployment was a record high.

Eurostat estimated that 19.2 million people in the euro area were jobless in May, an increase of 67,000 from April. For all 27 countries in the European Union, the unemployment rate was unchanged at 10.9 percent. The European bloc expanded to 28 countries on Monday when Croatia officially joined.

Joblessness in the euro zone has been rising almost without interruption since early 2008, when the financial crisis began, declining only briefly at the beginning of 2011, and analysts see little prospect for a sustained decline anytime soon.

While economists expect the euro zone economy to stabilize in the course of this year after a recession that has lasted a year and a half, growth will likely remain too slow to generate large numbers of jobs.

Nor is there much hope of government policies that would stimulate growth. European leaders agreed last week on a plan to combat youth unemployment, which rose to 23.8 percent in May in the euro zone from 23 percent a year earlier. The youth jobs plan calls for accelerated spending of 6 billion euros, or $7.8 billion, a sum that some analysts said was too small to make a big dent in the problem. On Wednesday, the German chancellor, Angela Merkel, will host other European leaders at a conference in Berlin on youth employment.

Economists said, however, that such efforts did not address the underlying cause of unemployment, namely a prolonged recession and a lack of credit in the most troubled countries. Political leaders have been reluctant to share the cost of recapitalizing weak banks or take other measures that would allow lending to resume.

“The measure that offers the greatest potential for job creation in the short to medium term is an easing of credit conditions,” Marie Diron, an economist who advised the consulting firm Ernst Young, said in a statement. “This would allow companies to invest and as a result recruit in the euro zone.”

The European Central Bank will hold its monetary policy meeting on Thursday, but it is not expected to introduce more stimulus to the euro zone economy. A cut in the benchmark interest rate, to 0.25 percent from a record low of 0.5 percent, is possible, but many say it would be unlikely to do much to encourage lending in troubled countries like Spain and Italy.

Banks in those countries are trying to cope with rising numbers of bad loans and are reluctant to lend no matter how cheaply they can borrow from the E.C.B. Meanwhile, the central bank remains reluctant to effectively print more money, as the United States Federal Reserve and Bank of England have done, because of opposition from Germany to more aggressive action.

Eurostat also reported Monday that inflation in the euro zone rose to 1.6 percent from 1.4 percent because of a surge in energy prices. While inflation remains below the E.C.B.’s target of about 2 percent, the uptick is likely to provide a further argument against increasing the benchmark interest rate.

Compounding the bank’s challenge, the numbers released Monday showed there remains a big difference in economic performance among euro zone countries. The divergence makes it difficult for the E.C.B. to craft a monetary policy that is appropriate for all members.

Unemployment rates in Spain and Greece were about 27 percent in May, with youth unemployment remaining well above 50 percent. At the other end of the scale, unemployment in Austria was 4.7 percent and in Germany was 5.3 percent. Both had youth jobless rates below 9 percent.

If there was any good news, economists said, it was that unemployment may not go up much more.

“An end to the euro zone labor market downturn is not yet imminent,” Martin van Vliet, an economist at ING Bank, wrote in a note to investors. “However, with the recession across the euro zone petering out, the peak in unemployment should not be too far away, either.”

Article source: http://www.nytimes.com/2013/07/02/business/global/euro-zone-joblessness-rises.html?partner=rss&emc=rss

Euro Zone Recession Is Reinforced by Second Quarter of Economic Decline

Gross domestic product in the euro zone fell 0.1 percent in the three months through September compared with the previous quarter, according to Eurostat, the European Union statistics agency. The downturn was slightly less severe than in the second quarter, when growth contracted 0.2 percent. But it was the fourth consecutive quarter of no growth or a decline.

Perhaps more worrisome, the data showed that Spain, Portugal and several other countries remained far from the kind of recovery that would bring increased tax revenue and help them overcome their debt problems. European leaders, who have benefited from a tenuous calm on financial markets in recent months, are likely to face additional pressure to ease the government austerity programs that have undercut growth in Southern Europe.

Economists at Nomura warned of “a depressionary environment in a growing share of the region.” In a note to clients, they said, “This negative loop has the potential to threaten the stability of the whole system.”

Some analysts had forecast a bigger decrease in output. But France registered a surprise uptick in growth and the Italian economy shrank less than expected, moderating the pace of decline across the region. Considered along with sagging factory output and business sentiment, though, the numbers Thursday reinforced expectations that the euro area as a whole could remain in recession well into next year.

“An end to the recession in the euro zone is still out of sight,” Christoph Weil, an economist at Commerzbank in Frankfurt, said in a note to clients.

Germany, which has the largest economy in the euro zone, continued to defy the crisis. Its economy grew 0.2 percent in the third quarter, slowing from a rate of 0.3 percent in the second quarter.

But data on exports, domestic demand and business sentiment indicated that growth in Germany would slow in future quarters because of falling demand from its neighbors.

A recession is often defined as two consecutive quarters of falling output, though many economists say it is important to take other data into account. But with unemployment in the euro area at 11.6 percent and nearly 26 million people out of work, few dispute that the region is in a deep downturn.

“Leading indicators suggest that the euro zone recession will broaden and deepen in the current fourth quarter,” said Martin van Vliet, an economist at ING Bank.

The European Union, which includes 17 countries in the euro zone and 10 others primarily in Eastern Europe, managed to return to growth in the quarter as several countries, including Latvia and Lithuania, recovered strongly. Growth for the bloc as a whole was 0.1 percent compared with the previous quarter, after a decline of 0.2 percent in the second quarter.

But in Western Europe the economic decline spread to Austria and the Netherlands, which had been growing in previous quarters. The Austrian economy contracted 0.1 percent, while the previously healthy Dutch economy plunged 1.1 percent, catching economists off guard.

One reason for the decline was that Dutch consumers cut back on purchases of cars, illustrating how the crisis in the European auto industry is having a broader effect. Slower export growth and a decline in construction also had an effect, according to Statistics Netherlands, the official data provider.

France grew more than analysts forecast, at 0.2 percent, because of increased exports and higher consumer spending. The Italian economy shrank 0.2 percent, which was less than expected and a less severe decline than in previous quarters. Foreign demand compensated for a decline in household spending in Italy, economists said.

There had been some signs in recent months that the euro zone, now in its third year of crisis, was beginning to stabilize. The exodus of money from Spain had stopped and borrowing costs for Spain and Italy have dropped out of the danger zone, thanks to a promise by the European Central Bank to intervene in bond markets. Exports from some of the troubled countries have risen, as companies put more emphasis on foreign markets to offset poor demand at home.

Mario Draghi, the central bank’s president, said last week that although growth would continue to slow through the end of this year, he expected a slow recovery next year. The data Thursday could raise expectations that the bank will cut its benchmark interest rate, already at a record low of 0.75 percent, when its policy makers meet next month.

But the central bank has already stretched its mandate to fight the crisis, and the burden may now fall primarily on government leaders. Germany could face added pressure to ease its insistence on drastic budget cuts by Spain, Greece, Italy and Portugal, especially after large protests in those countries this week.

Euro zone finance ministers are expected to meet next week to consider whether to release the next installment of aid for Greece, which it needs to avoid defaulting on its debt. Next month, European heads of government will hold a summit meeting to continue working on ways to make the common currency area more resilient, for example by pooling supervision of banks.

“It is essential that the period of relative calm on financial markets is preserved,” said Marie Diron, an economist who advises the consulting firm Ernst Young. “This will necessitate further quick progress on key reforms, including securing Greece’s financing and moving towards a comprehensive banking union.”

But disputes remain on the future shape of the euro zone, and there is a risk that leaders will not move fast enough. Economists said that much of the slowdown in business activity reflected uncertainty among managers, who do not want to invest until they are more confident of a recovery.

“The confidence shock will therefore continue to hinder investment and hiring decisions,” Mathilde Lemoine, an economist at HSBC, said in a note.

Article source: http://www.nytimes.com/2012/11/16/business/global/daily-euro-zone-watch.html?partner=rss&emc=rss

Debt Crisis Threatens to Taint Broader Economy

Most of Europe’s main stock indexes lost ground after the data suggested that the debt and economic problems in countries like Greece and Italy were infecting the rest of the 17-country euro zone. The debt crisis has led a number of governments to sharply cut spending while weathering market turmoil that has damaged business and consumer confidence.

Gross domestic product in the euro zone rose a mere 0.2 percent in the second quarter of 2011 from the first quarter, when growth had advanced by a healthy 0.8 percent, according to Eurostat, the European Union statistics agency. Quarterly economic growth across the 17-nation euro zone was the slowest since mid-2009.

G.D.P. growth in Germany, which has been the tractor hauling the rest of Europe, barely budged, rising only 0.1 percent from the first quarter, when the economy had expanded a robust 1.3 percent, the German Federal Statistical Office said. Quarter-on-quarter growth in the three months through June was well below forecasts of 0.5 percent.

The German figures come after data released on Friday showed that the French economy was at a standstill in the second quarter, leaving Europe’s two largest economies barely growing.

Because government revenue is directly tied to economic growth, the two pillars of the European economy may be less able — and less willing — to prop up the weaker members of the European monetary union. President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany met on Tuesday in Paris to discuss how to deal with the debt crisis.

“It’s the biggest potential risk,” said Jörg Krämer, chief economist at Commerzbank in Frankfurt. “I don’t worry so much about a moderation of growth two years after a recession. What is different this time is the potential escalation of the sovereign debt crisis.”

Economists said the data could simply reflect a pause after two years of brisk expansion. But the numbers could also signal that the sovereign debt crisis is undercutting growth outside the countries like Spain that are most directly affected.

“The longer the sovereign debt market remains stressed, the greater will be the damage to the wider economy,” Lloyd Barton, an economist who advised the consulting firm Ernst Young, said in a note Tuesday.

If there was any silver lining in the report, it was the hope that slower growth would lead to less inflation, giving the European Central Bank more leeway to keep interest rates low and intervene in bond markets. Since last week, the bank has been buying Italian and Spanish debt on the open market to hold down yields so that the two countries do not face ruinous borrowing costs.

“Today’s G.D.P. release points to slightly lower second-quarter growth than the E.C.B. was expecting and lends support to the dovish voices on the E.C.B. governing council,” Jens Sondergaard, an analyst at Nomura, said in a note. He was referring to members of the council who are less concerned about inflation than hard-line “hawks.”

What impetus remains in the European economy came from countries like Austria and Finland. Even Italy, with growth of 0.3 percent compared with the first quarter, outperformed Germany in the second quarter. A whiff of hope came from Portugal, one of the countries at the heart of the debt crisis, as the economy stopped shrinking for the first time since October 2010.

European stocks initially fell sharply on Tuesday, but recovered late in the day. The benchmark indexes in Germany and France all closed down less than 1 percent.

The euro fell to $1.4404, from $1.4444.

The German economic rebound since the recession of 2009, driven by exports of cars, machinery and other goods to China and other emerging markets, has helped counterbalance weak economies in southern Europe. But if Germany slows for an extended period, the challenges posed by the European sovereign debt crisis will become that much more daunting.

Despite signs that austerity programs were hurting growth, debt-ridden governments probably have little choice but to continue to cut spending to persuade their creditors that they can meet their debt obligations. Equally important, the European Central Bank has made it clear that it would support Italy and Spain by buying their bonds only if they continued to cut reduce their deficits.

The slowdown in Germany was caused by lower household consumption and construction investment, the German statistics office said. In addition, imports rose faster than exports and led to a buildup of inventories.

Mr. Krämer of Commerzbank said that a warm spring meant that construction projects in Germany had begun earlier than usual, subtracting some activity from the second quarter.

Germany had been enjoying a period of unusually high growth, during which the number of people employed rose 1.4 percent, to 41 million people from a year earlier, the German statistics office said Tuesday. Even with the slowdown in the second quarter, the economy still grew 2.7 percent from a year earlier.

The Federal Statistical Office revised its figures for previous quarters, which meant that, contrary to earlier data, German output remained below its peak in late 2008, just before the severe global recession struck.

The slowdown was foreshadowed by earnings from companies like Siemens and Deutsche Bank that fell short of analysts’ expectations, reinforcing the feeling that the pace of German economic growth was flattening. Surveys of business sentiment have also pointed to slower growth, though they are not yet signaling a recession.

Greece is already in recession, while growth in Spain slowed to 0.2 percent from 0.3 percent in the previous quarter.

Trade data from Eurostat contributed to the gloomy picture. Seasonally adjusted figures showed that both exports and imports in the euro area slowed in June, while the trade deficit widened to 1.6 billion euros ($2.3 billion), from 800 million euros in May.

Article source: http://feeds.nytimes.com/click.phdo?i=cb53a362973fb26bc5c807d03ce1acad