Thursday, March 1, 2012

Eurozone unemployment hits record high of 10.7pc

Spain’s jobless rate for people ages 16 to 24 is approaching 50pc, Greece’s is 48pc, and Portugal’s and Italy’s, 30pc. Photo: EPA

By Ambrose Evans-Pritchard 7:30PM GMT 01 Mar 2012

The eurozone's unemployment rate rose to a record high of 10.7pc in January, reaching levels of extreme social distress across large parts of Southern Europe.

Data from Eurostat showed that the region lost 185,000 jobs in one month, with the vast gap between North and South growing ever wider. The figures for the previous four months were also revised upwards sharply. There are now more than 450,000 more people without jobs than assumed a month ago.

Klaus Baader from Societe Generale said the outlook was "deteriorating drastically" in the region. "Economic slowdown and fiscal austerity has hit the labour market much harder than previously thought."

Eurozone inflation nudged up to 2.7pc, while the latest PMI data for February confirmed that Euroland's manufacturing is still contracting, though the index rose slighty to 49. The "misery mix" of rising unemployment and inflation is a nasty headache for policymakers, threatening incipient stagflation.

Spain's jobless rate continued its relentless climb to 23.2pc, rising to 49.9pc for youths. Long-term unemployment has increased sixfold since the start of the crisis and now makes up half the total. "This is the terrible cancer of our society," said Rafael Zornoza, the bishop of Cadiz.

The pain is certain to mount as premier Mariano Rajoy slashes spending. The International Monetary Fund said the economy would contract by 1.7pc this year. Government advisers fear that unemployment could rise above 6m by the end of the year unless Brussels agrees to relax its deficit target of 4.4pc of GDP.
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