The euro-area jobless rate rose to a record and inflation eased to a 23-month low as the fiscal crisis and tougher austerity measures deepened the region’s economic woes.
Unemployment in the 17-nation currency bloc increased to 11.7 percent in October from 11.6 percent in September, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995 and is in line with the median estimate of 34 economists in a Bloomberg News survey. Inflation slowed more than forecast to 2.2 percent in November, a separate report showed.
The euro-area economy has shrunk for two successive quarters, forcing companies to cut costs to help weather the downturn, and economists foresee a further contraction of 0.3 percent in the fourth quarter, the median of 25 forecasts in a separate Bloomberg survey showed. The Organization for Economic Cooperation and Development this week forecast contractions of 0.4 percent and 0.1 percent this year and next.
“The trend remains a gradual upward trend before we can hope for some stabilization in the second half of next year,” said Frederik Ducrozet, senior euro-area economist at Credit Agricole in Paris. “There’s no escaping the fact the unemployment rate will rise again in the next year; it’s a lagging indicator.”
The euro was off its session highs against the dollar after the reports. The European currency traded at $1.3003 at 12:05 p.m. in Brussels, up 0.2 percent on the day, after trading as high as $1.3028 earlier.
Siemens AG (SIE) today announced plans to eliminate 4,700 jobs at its Osram lighting subsidiary to reap 1 billion euros ($1.3 billion) in savings. The cuts come on top of 1,900 positions already trimmed at Osram.
The jobless report showed that 18.7 million people (EUGNEMUQ:US) were unemployed in the euro area in October, up 173,000 from the previous month. At 26.2 percent, Spain had the highest overall jobless rate in the currency bloc. Portugal’s unemployment rate was 16.3 percent, while Ireland reported a jobless rate of 14.7 percent. France’s jobless rate was 10.7 percent, while Austria had the lowest rate at 4.3 percent.
The data also showed that youth unemployment is at 23.9 percent across the euro area, with Spain’s rate more than double that at 55.9 percent, and the highest in Greece at 58 percent.
“Slowing core inflation and wage moderation throughout the euro region reflect the recession,” said Dominique Barbet, senior economist at BNP Paribas in Paris. “Purchasing power isn’t going to increase, so it won’t help the recovery.”
Governments’ budget cuts are harming investment and household spending across the region. Greece, now in its fifth year of recession had a 25.4 percent unemployment rate in August, the latest data available.
Spain and Cyprus this year joined the list of countries seeking external aid, following Greece, Portugal and Ireland. Euro-area finance ministers this week agreed on a package of measures to help reduce Greece’s debt load and prevent its exit from the euro.
In a sign of deepening European economic malaise, an Italian supermarket chain is offering all customers who spend more than 30 euros a shot at a lottery with an unusual payoff: part-time, temporary shop-assistant positions. Italy’s economy is mired in its fourth recession since 2001 with a double-digit joblessness rate.
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