Eurozone unemployment rises to 8.5 pct—EU

BRUSSELS—Unemployment in the 16 countries using the euro rose in February to 8.5 percent to hit the highest level in close to three years, according to official EU data on Wednesday.

The unemployment rate hit the highest level since May 2006 in February as an estimated 319,000 jobs were shed across the single currency bloc, the European Union’s Eurostat data agency said.

The eurozone joblessness rate stood at 8.3 percent in January and 7.2 percent in February 2008.

“Extended and now deep economic contraction, extremely weak business confidence and deteriorating profitability is weighing down ever harder on labor markets,” IHS Global Insight economist Howard Archer said.

After gradually falling in recent years to a record low of 7.2 percent in March 2008, unemployment in the then 15 eurozone countries began creeping higher from April 2008 in the face of a deteriorating economic outlook.

For the 27-nation EU as a whole, unemployment rose in February to 7.9 percent from 7.7 percent in January and 6.8 percent in February 2008.

Eurostat said that it estimated that 19.156 million people were without a job in February across the EU, of which 13.486 million were in the eurozone.

Economists said that unemployment was likely to keep marching higher, which would weigh heavily on the European economy, putting even more pressure on already timid consumers.

“Indeed, given the usual lag between developments in the labor market and those in wider activity, we see the unemployment rate rising to 10 percent by around the middle of this year,” said Jennifer McKeown at Capital Economics.

“Unfortunately, such a rapid deterioration in the labor market looks set to offset the positive impact of falling inflation on real incomes,” she added.–Agence France-Presse