Euro zone joblessness at 10-year high
Rate hits 9.5% in May
July 3, 2009
By Pan Pylas London
Unemployment in the 16 countries that use the euro spiked to a 10-year high in May, reinforcing concerns that any recovery will take time now that more than 15 million people are out of work.
The seasonally adjusted unemployment rate for the euro zone in May stood at 9.5 percent of the workforce, the highest level since May 1999 and up from April's 9.3 percent, Eurostat said yesterday. It said just over 15 million people were unemployed in May, up 273 000 on April's figure.
The increase was expected in light of the ongoing fall in output across Europe.
In the first quarter, the euro zone's output plunged by 2.5 percent as the global recession took its toll on the industrial sector in particular.
Spain is the euro zone's biggest casualty. Its jobless rate rose to 18.7 percent in May from 18 percent in April.
The lowest unemployment rate was in the Netherlands, where 3.2 percent of the working population were without a job in May, and Austria, where 4.3 percent were jobless.
The unemployment rate in Germany, Europe's biggest economy, was unchanged at 7.7 percent in May.
Unemployment is a lagging indicator, so the number of jobless will probably continue to rise for a while even when the recession officially ends.
Recent data have stoked hopes that the euro zone may start to see some sort of recovery towards the end of the year, but that high unemployment levels will continue to weigh on consumption and sentiment.
"Given that labour market developments tend to lag behind those in the wider economy, unemployment almost certainly has considerably further to rise," said Jennifer McKeown, an economist at Capital Economics. McKeown said she expected euro zone unemployment to hit 12 percent next year, the level many people think the US will hit too.
The unemployment news came just hours ahead of the latest interest rate decision by the European Central Bank (ECB), which kept its benchmark rate unchanged at the record low of 1 percent.
For the 27-member EU, the unemployment rate rose from 8.7 percent in April to 8.9 percent in May, the highest level since June 2005.
The EU-wide rate has been swollen by the Baltic countries, which are in deep recession following the collapse of a debt-fuelled economic boom. In Latvia, whose economy slumped by a staggering 18 percent year on year in the first quarter, the unemployment rate climbed to 16.3 percent in May from 15.3 percent in April.
In other data, Eurostat said the industrial producer price index fell by 0.2 percent in the euro zone in May from April and by 0.4 percent in the EU.
On a year-on-year basis, industrial prices were down 5.8 percent in the euro zone and by 5.7 percent in the EU.
McKeown said the unemployment and producer price data had combined to stoke renewed fears about a damaging deflationary spiral of falling prices, which might require the ECB to do more to stoke the economy. Higher unemployment tends to reduce the bargaining power of workers, causing wage pressures to ease. It also cuts into consumption.
"While the ECB seems unlikely to cut interest rates or announce new unconventional measures today, bolder policy support might be needed in future," she said. - AP
|
|
