The euro-area jobless rate rose to a record 12 percent in early 2013, adding to signs that the currency bloc’s recession extended into the first quarter.
Unemployment in the 17-nation euro area was 12 percent in February and the January figure was revised up to the same level from 11.9 percent estimated earlier, the European Union’s statistics office in Luxembourg said today. That is the highest since the data series started in 1995 and matches the median estimate of 31 economists in a Bloomberg News survey.
The euro-zone economy has contracted for five straight quarters and that trend is forecast to continue in the first three months of this year, a separate Bloomberg survey shows. The European Central Bank, which holds a rate-setting meeting this week, forecasts the economy will shrink 0.5 percent in 2013. The ECB has held its key rate at 0.75 percent since July.
“An end to the euro zone’s labor-market downturn is not yet in sight,” Martin van Vliet, economist at ING Bank NV, said in a research note. “We cannot fully rule out a surprise rate cut or new unconventional support on Thursday.”
The euro was down 0.1 percent from yesterday and traded at $1.2836 at 10:37 a.m. in London.
Today’s report showed that 19.1 million people were unemployed in the euro area in February, up 33,000 from the previous month.
The European Commission predicts unemployment rates of 12.2 percent this year and 12.1 percent in 2014. ECB President Mario Draghi said on March 7 that “it is of particular importance at this juncture to address the current high long-term and youth unemployment.”
Businesses ranging from banks to carmakers and airlines are trying to cut costs by shedding jobs. Spain’s CaixaBank (CABK) last week reached an accord with its unions to cut 2,600 jobs. Danone (BN), the owner of Evian bottled-water and Activia yogurt, plans to shed 900 jobs in Europe as demand weakens.
Fiat SpA (F) Chief Executive Officer Sergio Marchionne last month spoke out against deeper budget cuts. “I understand austerity, but we can lose weight until we die,” he said.
Renault SA (RNO) CEO Carlos Ghosn urged government spending to revive the region’s anemic car sales, which he forecast won’t recover for another three years.
The strains in the region have spread to the U.K., where a measure of manufacturing contracted for a second month amid weak demand in Europe for British exports. A gauge of factory activity was 48.3 in March, the second month of contraction, Markit Economics said today.
A separate release in the euro area showed a manufacturing gauge at 46.8. That compares with an initial estimate of 46.6 on March 21. The index in Germany, the region’s largest economy, was at 49.
The Purchasing Managers’ Index for China rose to 50.9 last month, an 11-month high, from 50.1 in February, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on April 1. A separate gauge from HSBC Holdings Plc and Markit Economics rose to 51.6 in March from 50.4.
Elsewhere, Australia’s central bank kept its benchmark interest rate unchanged to match a half-century low in response to a recovery in household spending as traders pushed out bets on the next reduction in borrowing costs.
Governor Glenn Stevens left the overnight cash-rate target at 3 percent, saying “recent information suggests that moderate growth in private consumption spending is occurring,” according to a Reserve Bank of Australia statement in Sydney today. “There are a number of indications that the substantial easing of monetary policy during late 2011 and 2012 is having an expansionary effect.”
Data due today in the U.S. will probably show that orders to U.S. factories rose 2.9 percent in February, according to the median estimate of 60 economists in a Bloomberg poll. Bookings dropped 2 percent in January, the most in five months.
To contact the editor responsible for this story: Craig Stirling at email@example.com