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Instant View: Euro zone joblessness hits highest ever level in March, April
June 1, 2012 / 9:29 AM / 5 years ago

Instant View: Euro zone joblessness hits highest ever level in March, April

BRUSSELS (Reuters) - Joblessness in the euro zone rose to 11 percent in March and April, the highest level since records began in 1995, the European Union’s statistics office Eurostat said on Friday.

ECONOMISTS’ COMMENTS

MARTIN VAN VLIET, ING

”The labor market recession in the euro zone continues to spread and deepen. The number of jobless in the 17-country region rose by 110,000 in April, marking the 12th straight monthly increase.

”The lack of change in the overall euro zone unemployment rate reflected increasing disparities between countries, with the jobless rate in Germany falling to 5.4 percent and unemployment in Spain and Portugal increasing further from already intolerably high levels. Unemployment in France, Italy, the Netherlands, and Belgium also edged higher.

”Unfortunately, the downturn in the euro zone labor market is not over yet. The employment expectations indices from the European Commission’s business survey have worsened sharply in recent months, pointing to further increases in unemployment ahead.

”We currently see the jobless rate peaking at or slightly above 11.5 percent, under the assumption that the Eurozone economy starts to emerge from its double dip recession later this year.

”However, the downturn may well prove more protracted as the bleak manufacturing PMI figures released earlier today remind us. Hence, the risk is for an even higher peak in unemployment.

“All in all, today’s grim unemployment figures provide a sober reminder that the euro zone economy is in desperate need of a more expansionary policy stance. In practice, this likely means a combination of a less contractionary fiscal thrust, a more expansionary monetary policy, and a weaker exchange rate. Moreover, drastic steps have to be taken to address the escalating debt crisis.”

PHILIP SHAW, INVESTEC

”Certainly the rise to 11 percent was in line with expectations, Germany appears to be broadly bucking the trend with unemployment broadly steady, but the weakness of euro zone activity has resulted in a worrying increase in joblessness and that doesn’t look as it is going to be reversed at any time soon.

”The high level of unemployment is putting cyclical pressure on government expenditure in many of the euro zone’s economies and that’s contributing to the lack of confidence in many of the euro zone’s sovereign debt markets.

“It’s all part of the bigger picture and obviously the range of unemployment across the euro zone is something to look at as well, we are at extremely high levels in several euro zone economies.”

HOWARD ARCHER, IHS GLOBAL INSIGHT

”The number of jobless across the euro zone rose a further 110,000 in April after rising by 438,000 in the first quarter of 2012. It was hardly any comfort that this was down from a rise of 133,000 in March and was the smallest increase since December.

”April’s rise took the total up to 17.405 million, which is the highest level since the euro zone was formed in January 1999.

“Furthermore, this was the 12th successive monthly rise in euro zone unemployment, and brought the cumulative rise to 1.797 million since April 2011.”

”Most countries saw unemployment increase in April although the increase was generally moderate in the core northern euro zone economies and the unemployment rate actually dipped to 5.4 percent in Germany.

”Worryingly but unsurprisingly, unemployment continued to move higher in the struggling southern periphery countries - Spain, Italy and Portugal. Indeed, the Spanish unemployment rate hit a dismal 24.3 percent. Greek unemployment is also rising sharply although there was no data for April.

”With the euro zone seemingly headed for renewed clear GDP contraction in the second quarter - and with overall Eurozone business confidence taking a further serious hit in May to be at the weakest level for two years or more across sectors - the likelihood is that the euro zone unemployment rate will move significantly higher.

”Indeed, it now looks odds-on that the euro zone unemployment rate will reach 11.5 percent by the end of the year, although the situation will vary markedly between countries.

”Companies generally are under serious pressure to keep their labor forces as tight as possible to contain their costs in the face of current limited demand, strong competition, squeezed margins and worrying and uncertain growth outlooks. Significantly, the European Commission’s business and consumer survey shows that employment expectations weakened across all sectors in May, as they had done in April.

”Indeed, employment expectations sank to a 27-month low among service companies in May and were at a 23-month low for industrial companies.

”Furthermore, public-sector jobs are likely to be pared in a number of countries going forward as part of the austerity measures being implemented.

“Meanwhile, the further marked rise in euro zone unemployment in April maintains belief that consumer spending will be generally muted in the near term at least, especially as consumers are also facing muted wage growth and tighter fiscal policy in many countries.”

LINKS

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Reporting by Robin Emmott and Ben Deighton

Our Standards:The Thomson Reuters Trust Principles.
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