Euro-Area Unemployment at 15-Year High as Slump Deepens: EconomyJennifer Ryan and Fergal O’Brien
Euro-region unemployment rose to a 15-year high and manufacturing contracted for a ninth month, adding to signs the economic slump is deepening.
The jobless rate in the 17-nation euro area increased to 10.9 percent in March from 10.8 percent in February, the European Union statistics office in Luxembourg said today. That’s the highest since April 1997, according to Bloomberg News data. Separate reports showed euro-area manufacturing contracted more than initially estimated in April and unemployment in Germany, the region’s largest economy, unexpectedly increased.
Rising joblessness will keep pressure on politicians to find ways of boosting growth as austerity measures designed to stem the debt crisis push economies into recession and provoke a backlash among citizens. European Central Bank President Mario Draghi last week called on leaders to create a “growth compact” to complement an agreement on fiscal rules. The ECB will probably keep its benchmark interest rate at a record low of 1 percent tomorrow.
“The grim unemployment figures for March will likely encourage talk about a long overdue ‘growth pact’ for the euro zone,” said Martin van Vliet, an economist at ING Group in Amsterdam. “Survey measures of hiring intentions point to further increases in unemployment over the coming months, so we would expect unemployment to breach the 11 percent threshold.”
The euro declined against the dollar today and was down 0.8 percent at $1.3137 as of 10:30 a.m. in London. The benchmark Stoxx Europe 600 Index pared gains to 0.1 percent.
The euro-area jobless rate matched the median forecast of 31 economists in a Bloomberg survey. In the 27-nation European Union, the unemployment rate was 10.2 percent in March, unchanged from the previous month and up from 9.4 percent a year earlier. Italy said today its jobless rate jumped to a 12-year high of 9.8 percent in March.
In Germany, the number of people out of work in increased a seasonally adjusted 19,000 in April to 2.87 million, the Nuremberg-based Federal Labor Agency said. Economists forecast a decline of 10,000, according to the median of 34 estimates in a Bloomberg survey. The adjusted jobless rate was unchanged at 6.8 percent, a two-decade low.
Declining unemployment has helped gird Germany against the debt crisis by bolstering household spending as export growth slows. Frank-Juergen Weise, the labor agency’s president, said the “positive trend on the labor market remains intact, but the economy has lost momentum.”
A manufacturing gauge in the euro region fell to 45.9 in April, a 34-month low, from 47.7 in March, Markit Economics said today. Readings below 50 indicate contraction. The report also indicated that job losses at factories increased and there was “weak” demand from both domestic and export customers.
The index contrasts with a similar gauge in the U.S. released yesterday showing manufacturing growth accelerated last month in the world’s largest economy.
A Chinese manufacturing index from HSBC Holdings Plc and Markit Economics today rose to 49.3 from 48.3 in March. That’s above a preliminary 49.1 reported April 23. A separate index released yesterday by China’s statistics bureau and logistics federation was at 53.3, indicating the fastest growth in a year.
In Europe, the debt crisis is curbing demand for goods. Manufacturers are also facing pressure from rising costs as oil prices increase. Stuttgart, Germany-based Robert Bosch GmbH, the world’s biggest car-parts supplier, said on April 26 that it will be harder to meet profit targets as high raw-material costs and spending on new business areas hurt margins.
“Economic uncertainties remain high,” Bosch Chief Executive Officer Franz Fehrenbach said.
The unemployment data showed that the number of people out of work in the euro area rose by 169,000 in March to 17.4 million. From a year earlier, unemployment increased by 1.73 million.
Spain had the region’s highest unemployment rate in March, at 24.1 percent. Data on April 30 showed that the Spanish economy contracted 0.3 percent in the first quarter, putting it into its second recession since 2009. The lowest jobless rates were in Austria and the Netherlands, at 4 percent and 5 percent respectively.
The labor-market and factory reports “underline the enormity of the challenge facing policy makers to respond,” said Jonathan Loynes, chief European economist at Capital Economics in London. “‘There may be a growing ‘consensus’ on the need for growth in the euro zone. But with unemployment rising and industry slumping, a prolonged recession looks much more likely.”
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