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Unemployment in Euro Zone at Record High Unemployment in Euro Zone at Record High
(about 7 hours later)
PARIS — New data Monday showing record jobless rates in the euro zone underscored the pain inflicted by the slowing world economy and the financial problems plaguing many of the countries that share the euro currency. PARIS — Unemployment in the euro zone hovered at a record 11.4 percent in August, according to data released on Monday, underscoring the pain inflicted by the slowing world economy and the financial problems plaguing many of the countries that share the euro.
Unemployment in the 17-member euro area rose to 11.4 percent in August, Eurostat, the statistical agency of the European Union, reported from Luxembourg. Unemployment in the 17 nations that use the euro was at 11.4 percent in August, according to Eurostat, the statistical agency of the European Union. The agency also revised the figures for June and July to 11.4 percent, up from the previously reported 11.3 percent, which was a record level for the region since the introduction of the euro in 1999.
The agency also revised the figure for June and July to 11.4 percent, up from the previously reported 11.3 percent, which was already a record level for the region since the introduction of the euro in 1999. The jobless numbers, which compare with the August rate of 8.1 percent in the United States, suggest that Europe’s recession is deepening despite the continued efforts of policy makers and finance ministers to cure the region’s malaise.
The jobless numbers, which compare with the August rate of 8.1 percent in the United States, suggest that Europe’s recession is deepening, despite the continued efforts of policy makers and finance ministers to cure the region’s malaise. Unemployment in Greece and Spain, currently the euro zone’s most economically troubled members, reached euro-era highs. And as both countries move ahead with plans for even tougher austerity budgets — Greece to appease its international creditors, Spain to potentially clear the path for European aid — their job outlooks could worsen further.
Unemployment in Greece and Spain, currently the euro zone’s most economically troubled members, reached new euro-era highs. And as both countries move ahead with plans for even tougher austerity budgets — Greece to appease its international creditors, Spain to potentially clear the path for European aid — their job outlooks could worsen further. Greece had an unemployment rate of 24.4 percent in June, the latest month for which data were available. Spain still had the region’s highest jobless rate, at 25.1 percent, and an even bigger problem among young people. Nearly 53 percent of Spaniards younger than 25 were classified as unemployed in August.
Visiting Madrid on Monday, Olli Rehn, the European commissioner for monetary affairs, said Europe stood “ready and willing” to act in response to a possible bailout request from Spain. “Youth unemployment, especially if prolonged, threatens to harm the self-esteem and economic potential of young people now and in the future,” Jonathan Todd, a spokesman for the European Commission, said in a statement on Monday after the release of joblessness figures.
Greece had an unemployment rate of 24.4 percent in June, the latest month for which data were available.
Spain, meanwhile, still had the region’s highest jobless rate, at 25.1 percent over all, and an even bigger problem among young people. Nearly 53 percent of Spaniards under age 25 were classified as unemployed in August.
“Youth unemployment, especially if prolonged, threatens to harm the self-esteem and economic potential of young people now and in the future,” Jonathan Todd, a spokesman for the European Commission, said in a statement Monday after the release of joblessness figures.
“This could also pose a serious threat to social cohesion and increase the risk of political extremism,” he said. “E.U. institutions and governments, businesses and social partners at all levels need to do all they can to avoid a ‘lost generation,’ which would be an economic and social disaster.”“This could also pose a serious threat to social cohesion and increase the risk of political extremism,” he said. “E.U. institutions and governments, businesses and social partners at all levels need to do all they can to avoid a ‘lost generation,’ which would be an economic and social disaster.”
Reinforcing the dismal data, the Markit Economics purchasing managers’ index on Monday confirmed an initial report showing that euro zone industrial production declined in September for a seventh consecutive month.Reinforcing the dismal data, the Markit Economics purchasing managers’ index on Monday confirmed an initial report showing that euro zone industrial production declined in September for a seventh consecutive month.
Jennifer McKeown, an economist with Capital Economics in London, noted in a report that while the economic strain was being felt most heavily at the “periphery” of the euro zone, in places like Spain and Portugal, “the situation is bad in the core, too,” with the French jobless rate at 10.6 percent. Last week the government of France said the number of jobless people had passed three million for the first time since 1999. Jennifer McKeown, an economist with Capital Economics in London, noted in a report that while the economic strain was being felt most heavily at the “periphery” of the euro zone, in places like Spain and Portugal, “the situation is bad in the core, too,” with the French jobless rate at 10.6 percent. Last week, the French government said the number of jobless people had passed three million for the first time since 1999.
The data Monday “suggest that the industrial sector is experiencing a sharp downturn,” Ms. McKeown wrote, “and with unemployment at a record high, the outlook for the consumer sector is gloomy, too.” She estimated that the gross domestic product of the euro zone would shrink 2.5 percent next year.The data Monday “suggest that the industrial sector is experiencing a sharp downturn,” Ms. McKeown wrote, “and with unemployment at a record high, the outlook for the consumer sector is gloomy, too.” She estimated that the gross domestic product of the euro zone would shrink 2.5 percent next year.
Mr. Rehn, of the European Commission, met Monday with the Spanish prime minister, Mariano Rajoy, and the economy minister, Luis de Guindos, but refused to speculate afterward whether the Spanish government would be pushed into asking for more European help to meet its debt financing obligations. Visiting Madrid on Monday, Olli Rehn, the European commissioner for monetary affairs, said Europe stood “ready and willing” to act in response to a possible bailout request from Spain.
Still, Mr. Rehn urged Madrid to make further efforts to overhaul its economy, saying that “Spain must continue the reform of its pensions system,” as well as align the retirement age more closely to today’s longer life spans. Mr. Rehn met on Monday with the Spanish prime minister, Mariano Rajoy, and the economy minister, Luis de Guindos, but refused to speculate afterward whether the Spanish government would be pushed into asking for more European help to meet its debt financing obligations.
Mr. Rehn’s visit came after the Spanish government last week presented a budget for 2013 that would include additional spending cuts. Spain had also released an independent assessment of its troubled banking sector, estimating that the biggest Spanish banks would need as much as €59.3 billion, or $76.5 billion, in additional capital. Still, Mr. Rehn urged Madrid to make further efforts to overhaul its economy, saying that “Spain must continue the reform of its pensions system,” as well as align the retirement age more closely to longer life spans.
In June, euro zone finance ministers agreed to make available as much as €100 billion to help prop up Spanish banks. Spanish officials indicated late last week that they might soon request around €40 billion of that money. Mr. Rehn’s visit came after the Spanish government last week presented a budget for 2013 that would include additional spending cuts. Spain had also released an independent assessment of its troubled banking sector, estimating that the biggest Spanish banks would need as much as 59.3 billion euros ($76.5 billion) in additional capital.
Mr. Rajoy also has been weighing, since early September, whether to tap into a new bond-buying program announced by the European Central Bank. His hesitancy stems from concerns that European lenders would require Madrid to make even deeper cuts than those foreseen in his latest budget proposal. In June, euro zone finance ministers agreed to make available as much as 100 billion euros to help prop up Spanish banks. Spanish officials indicated late last week that they might soon request about 40 billion euros of that money.
His plan for 2013 estimates debt interest payments of €38.6 billion next year, almost €10 billion more than what was budgeted for 2012, and underlining the extent to which Madrid faces borrowing costs that many economists consider to be unsustainable. Since early September, Mr. Rajoy has been weighing whether to tap into a new bond-buying program announced by the European Central Bank. His hesitancy stems from concerns that European lenders would require Madrid to make even deeper cuts than those foreseen in his latest budget proposal.
Alfredo Pastor, a professor of economics at the IESE business school in Barcelona, said Monday that “it is the adequate moment to ask for a bailout and lower interest payments on the debt.” His plan for 2013 estimates debt interest payments of 38.6 billion euros next year, almost 10 billion euros more than what was budgeted for 2012, and underlining the extent to which Madrid faces borrowing costs that many economists consider to be unsustainable.
So far, Mr. Rajoy seems intent on buying time, hoping that Spain’s borrowing costs remain relatively stable in the debt markets. That could enable his government to delay or avoid asking for help from the E.C.B. bond-buying program, whose main purpose would be to help keep a lid on the interest rates that investors demand to hold Spanish debt. So far, Mr. Rajoy seems intent on buying time, hoping that Spain’s borrowing costs remain relatively stable in the debt markets. That could enable his government to delay or avoid asking for help from the central bank bond-buying program, whose main purpose would be to help keep a lid on the interest rates that investors demand to hold Spanish debt.
Madrid’s release of the 2013 budget last week seems to have temporarily eased pressure on Spain’s 10-year bond yield, or interest rate. After cresting above 6 percent at one point last week, on Monday it was trading at 5.83 percent.Madrid’s release of the 2013 budget last week seems to have temporarily eased pressure on Spain’s 10-year bond yield, or interest rate. After cresting above 6 percent at one point last week, on Monday it was trading at 5.83 percent.
But Spain’s debt challenges are not likely to go away soon. In addition to the budget problems of the central government, 17 regional governments are also struggling to meet deficit targets.But Spain’s debt challenges are not likely to go away soon. In addition to the budget problems of the central government, 17 regional governments are also struggling to meet deficit targets.
During the weekend, the government in one of the most troubled regions, Castilla-La Mancha, which is controlled by Mr. Rajoy’s own Popular Party, presented a 2013 budget that would replace salaries of regional lawmakers with per diem payments for time spent in the area’s Parliament.

David Jolly reported from Paris and Raphael Minder from Madrid. James Kanter contributed reporting from Brussels.

Raphael Minder reported from Madrid. James Kanter contributed reporting from Brussels.