BRUSSELS Business morale in the euro zone improved again in December, but unemployment hit a new record and households held back from spending before Christmas, suggesting the bloc's emergence from recession will be slow.
Economic sentiment in the 17 countries using the euro rose by 1.3 points to 87 in the second straight month of gains after almost a year of falls, the European Commission's monthly business and consumer survey showed on Tuesday.
Optimism that the euro zone is beginning to recover from a deep banking and public debt crisis was tempered by data showing the jobless rate in November was at its highest level since the euro was introduced in 1999.
"A growing number of businesses are beginning to see light at the end of the tunnel, but consumers remain very gloomy," said Martin Van Vliet, an economist at ING in Amsterdam.
"Consumer spending is crucial to ensure a sustainable recovery," he said, forecasting a stagnant economy in 2013.
Unemployment rose to 11.8 percent of the working population or 18.82 million people, and 113,000 more people were without a job than in October, the EU's statistics office Eurostat said, as companies ranging from carmakers to retailers cut staff.
Feeble demand was also evident in retail trade data that was released by Eurostat on Tuesday, showing a mere 0.1 percent rise in sales volumes in November from the previous month, not enough to account for sharp falls in August, September and October.
Another month of falls was only avoided in November because European motorists spent more on fuel. Sales of food and drinks fell even in the run-up to the year's busiest shopping season.
While business morale has been helped by a series of steps to prevent the break-up of the euro zone, rising unemployment and stalled consumer spending underscore just how difficult the euro zone's economic recovery will be.
Consumer spending generates about half of the euro zone's economic output and the bloc is relying on Asian and U.S. demand for its exports to generate growth at a time when major economies are only beginning to recover from the damaging repercussions of the euro zone's crisis.
The euro zone slipped into its second recession since 2008 last year and economists see the recession continuing during 2013, with a recovery coming towards the end of the year.
That could be helped along by further interest rates cuts by the European Central Bank, although no such moves are expected when the bank meets on Thursday for its monthly meeting.
(Reporting by Robin Emmott; Editing by Rex Merrifield and Catherine Evans)