Eurozone jobless rate unchanged

BRUSSELS, Belgium (Reuters) — The euro zone jobless rate held unchanged at a three-and-a-half year high in July and producer prices were more subdued than expected in the same month, the European Union statistics office said.

It was the latest evidence that improving sentiment in the 12-member bloc has yet to be backed up by concrete signs of improvement in its economy at the start of the third quarter.

Euro zone consumers, whose spending has been restrained by concern about job prospects, are unlikely to be reassured by the data which showed the bloc’s jobless rate was steady at 8.9 percent in July.

Separate data showed July producer prices were unchanged from the previous month and rose 1.3 percent from a year earlier.

That was below the expectations of economists polled by Reuters who had forecast a monthly increase of 0.2 percent and a year-on-year rise of 1.5 percent.

A breakdown of the jobless data, which was in line with economists’ expectations, showed Spain had the highest unemployment rate in the region at 11.4 percent.

The continued sluggishness of the euro zone economy means firms could cut more jobs in the coming months and push the unemployment rate higher still.

Only last week, German insurer Allianz said its banking division, Dresdner Bank, would cut another 4,700 jobs by 2005 and German state bank WestLB warned more posts would be axed at home and abroad.

Still, the weakness of euro zone economic activity is helping to keep a lid on pipeline inflation pressures at a time when consumer prices are rising faster than the European Central Bank’s two percent tolerance threshold.

Energy prices, which boosted the consumer price inflation rate in August according to data last week, rose by 0.7 percent from the previous month, at the producer level — the biggest increase since February.

However, after stripping out energy costs, July producer process fell 0.1 percent from the previous month and rose just 0.6 percent from a year earlier, less than half the annual headline rate.

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