Eurozone unemployment rises again

Unemployment across the eurozone rose to its highest level in almost three years in February as the economic downturn continues to tighten its grip.

The jobless rate across the 16 nations that share the euro rose to 8.5%, or 13.47 million, up from 8.3% in January, official figures show.

The rate across the wider European Union rose to 7.9% from 7.7%, which equates to 19.16 million unemployed.

Figures also show that eurozone inflation fell to 0.6% in March.

In February, the inflation rate was 1.2%.

Yet more figures out on Wednesday also show that the pace of decline in eurozone manufacturing eased slightly in March from a 12-year low in February.

Unemployment in the eurozone has now risen by more than two million since February last year, while that across the 27 nations of the EU has risen by more than three million.

Spain has the highest level of unemployment, at 15.5%, closely followed by Latvia (14.4%) and Lithuania (13.7%).

The Netherlands has the lowest rate, at just 2.7%.

Rate cuts

“February’s very sharp rise in eurozone unemployment provides further confirmation that a consumer recovery is only a distant prospect,” said Jennifer McKeown at Capital Economics.

She now expects the jobless rate to hit 10% by the middle of this year.

The effects of rising unemployment will be widespread, analysts said.

“Persistent and faster rising unemployment will weigh down on eurozone consumer spending, especially as it will be liable to lead to slowing wage growth.

“This will more than counter the boost to purchasing power over the coming months from sharply retreating inflation,” said Howard Archer at IHS Global Insight.

Indeed the figures will add to pressure on the European Central Bank (ECB) to cut interest rates further to boost consumer spending.

“If the ECB needed any more confirmation to cut rates, then this is it,” said Sunil Kapadia at UBS.

He said he expected a cut of half a percentage point on Thursday.

“We think that will probably be the floor given that markets will be close to zero at that point,” he added. –BBC News