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Unemployment Climbs in Euro Zone Unemployment Climbs in Euro Zone
(about 1 hour later)
PARIS — Unemployment in the euro zone continued to climb into record territory, official data showed Tuesday, with investors watching for possible new action by governments and the European Central Bank. PARIS — Unemployment in the euro zone rose to a new record in November, according to data released Tuesday that also showed that the troubles in the 17-nation currency zone are straining its strongest member, Germany.
The jobless rate in the 17-nation currency bloc rose to 11.8 percent in November from 11.7 percent in October, Eurostat, the statistical agency of the European Union, reported from Luxembourg. Eurostat estimates that about 18.8 million were in the euro zone, were unemployed in November – 2 million more than a year earlier, following a period of economic stagnation and budget-balancing measures. The euro zone jobless rate rose to a new high of 11.8 percent in November from 11.7 percent in October, Eurostat, the statistical agency of the European Union, reported from Luxembourg. Eurostat estimates that about 18.8 million in the euro zone were unemployed in November – 2 million more than a year earlier.
A separate report from Eurostat showed that retail sales in the euro zone fell 2.6 percent in November from a year earlier, though they managed a 0.1 percent gain from October. Germany has provided necessary momentum to Europe’s overall economy throughout the past three years, proving resilient to the crisis plaguing the common currency, largely due to the strength of its exports.
The latest dire news for the euro zone economy comes as the governing council of the E.C.B. prepares to hold a policy meeting Thursday. A sharp dip in bank lending reported last week has already led some analysts to suggest that the central bank might try new steps to stimulate the economy, perhaps by cutting its benchmark lending rate from the current 0.75 percent. But on Tuesday, the Federal Statistics Office in Berlin said that German imports slid 3.7 percent in November, while exports dropped 3.4 percent, resulting in a narrowing of Germany’s trade surplus to €14.6 billion, or $19 billion.
Economists surveyed by Reuters expect the E.C.B. to leave policy unchanged Thursday, as the central bank waits for a clearer picture of the economic situation to emerge. German factory orders also fell in November amid weak demand from outside the euro area, the Economy Ministry in Berlin said Tuesday. Orders, adjusted for seasonal swings and inflation, dropped 1.8 percent from October, when they jumped a revised 3.8 percent.
Like their counterparts in the United States, Japan and Britain, the euro zone monetary authorities have already opened the spigots, allowing banks to borrow essentially as much as they want at the benchmark rate. Mario Draghi, the E.C.B. governor, has pledged to do whatever is necessary to ensure the stability of the euro, including buying the sovereign bonds of Spain and Italy to hold their borrowing costs to sustainable levels. “The November numbers are not a one-off but an extension of the current trend of weakening exports,” Carsten Brzeski, an economist at ING, wrote in a research note on Tuesday in which he pointed out an overall decline in German exports of about 4 percent since last May.
The central bank’s attitude has succeeded in calming markets and driving down government bond yields for embattled countries. The European Commission reported Tuesday that an index of economic sentiment in the euro zone had improved in December by 1.3 points, to 87.0. “Economic sentiment in the euro area improved among consumers and across all sectors, except retail trade,” the commission reported. “Today’s data confirmed our view that exports should have turned from driver of growth into drag on growth,” he wrote.
Gilles Moëc, an economist at Deutsche Bank in London, said the data Tuesday were consistent with expectations that the euro zone economy would remain in recession through the winter, with the unemployment rate possibly rising to as high as 12.4 percent. “We’re still far below the level of growth that would stabilize the labor market,” he said. A separate report from Eurostat showed retail sales fell 2.6 percent in November from a year earlier, though they managed a 0.1 percent gain from October.
But he added that the commission’s economic sentiment report, as well as recent surveys of purchasing managers, suggested that the downturn in the manufacturing sector had “bottomed out,” making possible a return to growth later in the year. The latest dire reports come as the governing council of the European Central Bank prepares to hold a policy meeting Thursday, followed by an interest-rate announcement. Despite a sharp dip in bank lending reported last week that has some analysts suggesting the central bank might try new steps to stimulate the economy, economists surveyed by Reuters expect the E.C.B. to leave policy unchanged this month, as it waits for a clearer picture of this year’s economic situation to emerge.
“External demand seems to be holding up better than we had thought,” Mr. Moëc said. “Now we are to a large extent dependent on what happens in the United States,” he said, referring to the negotiations over the budget. Like their counterparts in the United States, Japan and Britain, the euro zone monetary authorities have already opened the spigots, allowing banks to borrow essentially as much as they want at the benchmark rate. Mario Draghi, the E.C.B. governor, has pledged to do whatever is necessary to ensure the stability of the euro, including, if necessary, buying the sovereign bonds of Spain and Italy to hold their borrowing costs to sustainable levels.
The president of the European Commission, José Manuel Barroso, said Monday in Lisbon that “the existential threat against the euro has essentially been overcome. ” The central bank's action has succeeded in calming markets and driving down government bond yields for embattled countries. The European Commission reported Tuesday that an index of economic sentiment in the euro zone had improved in December by 1.3 points, to 87.0 “Economic sentiment in the euro area improved among consumers and across all sectors, except retail trade,” the commission reported.
“In 2013 the question won’t be if the euro will, or will not, implode,” he said.
Europe also got a vote of confidence from Tokyo on Tuesday, as Finance Minister Taro Aso said Japan would buy bonds of the European Stability Mechanism, the euro zone bailout fund, as well as euro sovereign debt.Europe also got a vote of confidence from Tokyo on Tuesday, as Finance Minister Taro Aso said Japan would buy bonds of the European Stability Mechanism, the euro zone bailout fund, as well as euro sovereign debt.
“The financial stability of Europe will help the stability of foreign exchange rates, including the yen,” Mr. Aso was quoted by the Nikkei newspaper as saying.“The financial stability of Europe will help the stability of foreign exchange rates, including the yen,” Mr. Aso was quoted by the Nikkei newspaper as saying.
Attacking joblessness may require governments to ease back on austerity measures that many economists, including some at the International Monetary Fund, say might have gone too far. In France, President François Hollande has vowed to turn around the flagging labor market in France, where, according to Eurostat, unemployment as 10.5 percent in November. Attacking joblessness may require governments to ease back on austerity measures that many economists, including some at the International Monetary Fund, say might have gone too far. In France, President François Hollande has vowed to turn around the flagging labor market in France, where, according to Eurostat, unemployment as 10.5 percent in November.
Eurostat said Spain, suffering from the collapse of a property bubble and struggling to cope with tough austerity measures, had the highest unemployment rate in the euro zone, at 26.6 percent. Greece, the beleaguered country where the sovereign debt crisis began, was next at 26.0 percent, according to September data. Austria, at 4.5 percent, tiny Luxembourg, at 5.1 percent, and Germany, at 5.4 percent, were the lowest. Eurostat said Spain, suffering from the collapse of a property bubble and struggling to cope with tough austerity measures, had the highest unemployment rate, at 26.6 percent. Greece, the beleaguered country where the sovereign debt crisis began, was next at 26.0 percent, according to September data. Austria, at 4.5 percent, tiny Luxembourg, at 5.1 percent, and Germany, at 5.4 percent, were the lowest.
Worryingly, youth unemployment continues to grow, with 5.8 million people under 25 classified as jobless in November, up 420,000 from a year earlier.Worryingly, youth unemployment continues to grow, with 5.8 million people under 25 classified as jobless in November, up 420,000 from a year earlier.
James Kanter in Brussels and Hiroko Tabuchi in Tokyo contributed reporting. In Berlin for talks with Chancellor Angela Merkel on Tuesday, the Greek prime minister, Antonis Samaras, singled out youth unemployment as one of the largest challenges Greece faces in trying to revive its economy. But he told reporters before meeting the chancellor that his overall message was one of optimism.
“I see the glass half-full,” Mr. Samaras said before taking part in an economic conference held behind closed doors in the German capital. “We’re delivering and Europe’s helping.”
It was the Greek prime minister’s second trip to Berlin since taking office and although the mood appeared lighter than during his inaugural visit in August, which came on the heels of calls from within Ms. Merkel’s government for Greece to leave the common currency, his country still faces enormous challenges.
Greece is focusing its efforts on winning back the trust of Europeans, as well as the markets, Mr. Samaras said. But he stressed that the high unemployment, especially among young people, was weighing heavily on Greeks.
“I would like to make it clear up front that our country is making enormous efforts and many are paying a high price, in order to get things back on track,” Mr. Samaras said.
Ms. Merkel stressed that Greece’s European partners must not leave it alone with its troubles, perhaps wary of the fragility of Mr. Samaras’ three-party coalition government which has been forced to push through deeply unpopular, painful reforms.
“We also must do everything to guarantee economic growth, security and jobs,” Ms. Merkel said.
David Jolly reported from Paris. James Kanter in Brussels and Niki Kitsantonis in Athens contributed reporting.