Euro-Area Unemployment Rises to Record 11.7% on Recession
The euro-area jobless rate rose to a record in October and inflation slowed for a second month in November as the fiscal crisis and tougher austerity measures deepened the region’s economic woes.
Unemployment in the 17-nation single-currency bloc increased to 11.7 percent from 11.6 percent in September, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995 and is in line with the median estimate of 34 economists in a Bloomberg News survey. Inflation slowed more than forecast to 2.2 percent as energy prices fell, a separate report showed.
The euro-area economy has shrunk for two successive quarters, forcing companies to cut costs to help weather the downturn, and economists foresee a further contraction of 0.3 percent in the fourth quarter, the median of 25 forecasts in a separate Bloomberg survey showed. The Organization for Economic Cooperation and Development this week forecast contractions of 0.4 percent and 0.1 percent this year and next.
“The trend remains a gradual upward trend before we can hope for some stabilization in the second half of next year,” said Frederik Ducrozet, senior euro-area economist at Credit Agricole in Paris. “There’s no escaping the fact the unemployment rate will rise again in the next year; it’s a lagging indicator.”
Siemens Job Cuts
The euro was off its session highs against the dollar after the reports. The European currency traded at $1.2986 at 2:22 p.m. in Brussels, up 0.1 percent on the day, after trading as high as $1.3028 earlier. The Stoxx Europe 600 Index (SXXP) gained 0.1 percent to 276.62.
Siemens AG (SIE) today announced plans to eliminate 4,700 jobs at its Osram lighting subsidiary to reap 1 billion euros ($1.3 billion) in cost savings. The cuts come on top of 1,900 positions that Osram already reduced in fiscal 2012.
In another sign of the deepening European economic malaise, an Italian supermarket chain is offering all customers who spend more than 30 euros a shot at a lottery with an unusual payoff: part-time, temporary shop-assistant positions. Italy’s economy is mired in its fourth recession since 2001 with a double-digit joblessness rate, the highest level in 13 years at 11.1 percent.
Eurostat’s jobless report showed that 18.7 million people were unemployed in the euro area in October, up 173,000 from the previous month. France’s jobless rate was 10.7 percent, while Austria had the lowest rate at 4.3 percent. The data also showed that youth unemployment is at 23.9 percent, with Spain’s rate more than double that, at 55.9 percent.
Spain and Cyprus this year joined the list of countries seeking external aid, following Greece, Portugal and Ireland. Euro-area finance ministers this week agreed on a package of measures to help reduce Greece’s debt load and prevent its exit from the euro.
The euro-area inflation rate fell for a second month in November to 2.2 percent, below the median forecast of 2.4 percent in a Bloomberg News survey of 38 economists. Energy prices increased 5.8 percent in November after an 8 percent gain a month earlier.
“Slowing core inflation and wage moderation throughout the euro region reflect the recession,” said Dominique Barbet, senior economist at BNP Paribas in Paris. “Purchasing power isn’t going to increase, so it won’t help the recovery.”
Spending also shows signs of faltering in the world’s largest economy. Spending by U.S. consumers unexpectedly declined and incomes stagnated in October as superstorm Sandy kept those in the Northeast from getting to work or from shopping at malls and car dealerships.
Even so, investors are gaining confidence the worst may be over as China’s prospects improve and the U.S. looks likely to avoid the so-called fiscal cliff, according to results of the latest Bloomberg Global Poll issued yesterday. Two-thirds of the 862 surveyed described the global economy as either stable or improving.
The poll showed confidence in China’s economy is at the highest in more than a year, as data from factory production to retail sales show growth in the world’s second-largest economy is picking up this quarter after a seven-quarter slowdown.
Elsewhere in Asia, Japan’s factory output unexpectedly rose the most since December on production of parts for devices including Apple Inc. ’s iPhone, the Trade Ministry said in Tokyo today. Production of electronic parts and devices rose 14.7 percent from September, the biggest advance since at least 1998, the ministry said.
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