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Unemployment in Euro Zone Reaches a Record High of 12 Percent

PARIS — Unemployment in the euro zone rose to yet another record high in the first two months of the year, official data showed Tuesday, providing confirmation that the economy remains in a deep freeze.

The jobless rate reached 12 percent in both January and February, the highest since the creation of the euro in 1999, Eurostat, the statistical agency of the European Union, reported from Luxembourg.

The January jobless rate for the 17-nation currency union was revised upward from the previously reported 11.9 percent.

For the overall European Union, the February jobless rate rose to 10.9 percent from 10.8 percent in January, Eurostat said, with more than 26 million people without work across the 27-nation bloc.

European officials continue to hold out hope that the economy, which continued to shrink in the first quarter of 2013, will begin turning around in the second half of the year. Many private sector forecasters are more pessimistic, expecting a contraction of as much as 2 percent in the euro zone’s gross domestic product this year, after a 0.9 percent contraction last year.

While there is general agreement that the current course for addressing the euro crisis — heavily focused on budget- balancing measures that reduce overall demand — is not working, the need for emergency action like the recent bailout of Cyprus has appeared to inhibit any deep rethinking of economic policy.

In the absence of new measures to stimulate growth at the European and national levels, all attention will be focused Thursday on the governing council of the European Central Bank, which meets in Frankfurt to consider whether to maintain interest rates at their current record low or cut even further.

Britain, the largest E.U. economy outside the euro zone, had an unemployment rate of 7.7 percent in December, the latest available month. In the United States, the jobless rate fell in February to 7.7 percent, the lowest since late 2008. The consensus among economists surveyed by Reuters is for U.S. nonfarm payrolls Friday to show a gain of 200,000 jobs in March, after a gain of 236,000 in February.

The European labor market has now declined for 22 straight months, making this the worst downturn since the early 1990s, Jennifer McKeown, an economist in London with Capital Economics, wrote in a note. In particular, she said, the rise in France’s February jobless rate to 10.8 percent from 10.7 percent in January “looks very worrying.”

“With fiscal tightening still putting downward pressure on disposable incomes and consumer confidence at very low levels, household spending is likely to fall further in the coming months,” Ms. McKeown said.

On Tuesday, a report by Markit Economics showed the euro zone’s manufacturing sector contracted again in March, with an index of purchasing managers activity dropping to 46.8 from 47.9 in February. An index level below 50.0 suggests contraction, while a level above that suggests expansion.

The manufacturing index has contracted every month since August 2011. Manufacturing activity in Germany and Ireland, which had been expanding, began to decline again.

The euro zone manufacturing sector shed jobs in March for a 14th consecutive month, Markit reported, with “steep rates of declines reported in France, Italy, Spain, the Netherlands, Ireland and Greece,” and only Germany and Austria bucking the trend.

Eurostat said Greece had the euro zone’s highest unemployment rate: 26.4 percent unemployment in December, the latest month for which data are available. A sovereign debt crisis, and the tax increases and spending cuts that followed it, have wrecked the Greek economy. An astonishing 58.4 percent of Greek youth were classified as unemployed, Eurostat reported.

Spain, where the economy has also contracted sharply following the collapse of the global credit bubble, posted the second-highest unemployment rate in the euro zone: 26.3 percent in February. Austria’s jobless rate was the lowest, at 4.8 percent. Germany's was near the bottom at 5.4 percent, while France’s was double its larger neighbor, at 10.8 percent.

27.0 - Greece

26.1 - Spain

15.8 - Portugal

14.0 - Slovakia

14.0 - Ireland

12.9 - Cyprus

11.1 - Italy

10.8 - Estonia

10.7 - France

8.6 - Slovenia

7.9 - Finland

7.7 - Britain*

7.7 - United States*

7.7 - Netherlands

7.4 - Belgium

6.9 - Malta

5.4 - Australia*

5.3 - Germany

5.1 - Luxekburg

4.8 - Austria

by Anonymousreply 004/02/2013
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