Euro-Area Unemployment Increases to Record 12.1% Amid Recession

The euro-area jobless rate rose to a record in March, increasing pressure on the European Central Bank to take additional measures to boost growth.

The euro-area unemployment rate advanced to 12.1 percent from 12 percent in the previous two months, the European Union’s statistics office in Luxembourg said today. That’s in line with the median of 31 economists’ estimates in a Bloomberg News survey.

Soaring unemployment “cannot be ignored, because this is the biggest fragmentation that is happening in Europe,” ECB Vice President Vitor Constancio said on April 25. “It’s even worse in what regards youth unemployment.”

Today’s report showed that 19.2 million people were jobless in the euro area in March, up 62,000 from the previous month. Youth unemployment was at 24 percent. The jobless rate in Germany, Europe’s largest economy, held at 5.4 percent.

The Frankfurt-based central bank will reduce its benchmark rate to a record low 0.50 percent on May 2, a separate Bloomberg survey shows. On April 19, ECB Governing Council member Jens Weidmann said the bank would only cut interest rates if economic data worsen. President Mario Draghi said the same day that the economic situation in the 17-nation euro area hadn’t improved since the ECB’s last meeting on April 4.

Car-Market Contraction

The euro-area economy has contracted for five quarters and is forecast to shrink 0.1 percent in the first three months of 2013 before returning to growth, another Bloomberg survey shows. The European Commission sees the economy shrinking 0.3 percent this year. Eurostat will release a preliminary report on first-quarter gross domestic product on May 15.

Europe’s second-largest carmaker, PSA Peugeot Citroen, plans to eliminate 11,200 jobs in France, or 17 percent of its domestic workforce, as an intensifying car-market contraction in Europe caused first-quarter revenue to drop 6.5 percent.

In Spain, the jobless number is the highest since at least 1976, the year after dictator Francisco Franco’s death heralded Spain’s transition to democracy.

The country’s fourth-largest builder, Fomento de Construcciones & Contratas, may fire 9.7 percent of its 1,500 garbage collectors amid slower activity, Europa Press reported. FCC is already negotiating with labor unions to eliminate 17.5 percent of jobs in its construction unit.