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Unemployment Malaise Lingers in Euro Zone Unemployment Malaise Lingers in Euro Zone
(about 3 hours later)
PARIS — The euro zone labor market remains in the doldrums, official data showed on Tuesday, as unemployment in Italy rose to a record level. PARIS — The euro zone labor market remains in the doldrums, official data showed on Tuesday, ticking higher in France and rising to a record in Italy.
The jobless rate in the 18-nation currency bloc stood at 11.9 percent in February, unchanged from January’s revised figure and flat since October, according to a report by Eurostat, the Luxembourg-based statistics agency of the European Union.The jobless rate in the 18-nation currency bloc stood at 11.9 percent in February, unchanged from January’s revised figure and flat since October, according to a report by Eurostat, the Luxembourg-based statistics agency of the European Union.
About 25.9 million people remained without work across the 28-nation European Union, Eurostat estimated. About 25.9 million people remained without work across the 28-nation European Union, Eurostat estimated, out of a potential labor force of about 244 million.
There was one bright spot in the data: Eurostat said that the number of unemployed fell by 65,000 from January. While that was an encouraging sign, it did not affect the jobless rate for the euro zone. But for the European Union over all, the jobless rate slipped to 10.6 percent in February from 10.7 percent in January. The European economy officially rose out of recession in the second quarter of 2013, but the labor market remains in poor health more than five years after the credit crisis struck in 2008, followed by a crisis of confidence in a number of euro zone countries, and in the common currency itself.
Markets were upbeat after the report, with the euro rising 0.2 percent to $1.3794 and the Euro Stoxx 50 index, which tracks blue-chip stocks, adding about half a percent in morning trading. European leaders responded to those crises with austerity measures — the policy of budget discipline — the only remedy that Germany, with the union’s largest economy, would accept.
That policy, which gave the European Central Bank enough cover to promise unlimited action in support of euro zone countries, has calmed the markets. But the decline in government spending also hammered overall demand, undermining employment and reducing inflationary pressures.
There was one bright spot in the data released on Tuesday: Eurostat said that the number of unemployed in the European Union fell by 65,000 from January. The monthly data do not provide a detailed breakdown explaining the decrease.
While that figure was an encouraging sign, it did not affect the jobless rate for the euro zone. It did, however, nudge down the unemployment rate for the broader European Union to 10.6 percent in February from the revised 10.7 percent in January.
Markets were upbeat after the report, with the euro rising 0.2 percent to $1.3802 and the Euro Stoxx 50 index, which tracks blue-chip stocks, adding about half a percent in Paris afternoon trading.
Clemente De Lucia, an economist at BNP Paribas, noted that the continuing disappointments from the labor market were not surprising, even though other recent indicators, like surveys of purchasing managers, have suggested that the economy remained in an expansionary phase.
He said new hiring was a “lagging indicator,” as businesses in many European countries face substantial legal barriers to shedding jobs in a downturn, and are very cautious about adding workers. Thus the economy may have to pick up some steam before hiring can take off.
In Italy, where the jobless rate reached a record 13 percent in February from 12.9 percent a month earlier, the new prime minister, Matteo Renzi, is hoping an aggressive policy change will restart the faltering economy.In Italy, where the jobless rate reached a record 13 percent in February from 12.9 percent a month earlier, the new prime minister, Matteo Renzi, is hoping an aggressive policy change will restart the faltering economy.
The latest data showed the unemployment rates in Greece and Spain at their highest level in decades, at 27.5 percent and 25.6 percent, respectively. Michel Martinez, an economist at Société Générale in Paris, said that many Italian companies had tried to hold onto their employees through thick and thin, but that many remained under pressure to cut workers to restore weakened profit margins.
The Italian jobless rate is probably near its peak now, Mr. Martinez said, but will remain high for some time because of the poor state of the country’s economy.
In France, the jobless rate ticked up to 10.4 percent from 10.3 percent in January. Unemployment was the biggest factor in the drubbing that President François Hollande’s government received in municipal elections this past weekend, which led to the ouster of Jean-Marc Ayrault as prime minister in favor of Manuel Valls, the former interior minister.
The labor market in Greece remained the worst in Europe, with joblessness at a depression-level 27.5 percent. Spain, at 25.6 percent, was not far behind, but the market there is showing a glimmer of hope, edging down from 25.8 percent in January.
Austria registered the lowest unemployment rate in the union, at 4.8 percent, followed by Germany, at 5.1 percent. In addition to relatively strong economies by current European standards, the two countries have extensive work-sharing programs that help to hold down the figures.Austria registered the lowest unemployment rate in the union, at 4.8 percent, followed by Germany, at 5.1 percent. In addition to relatively strong economies by current European standards, the two countries have extensive work-sharing programs that help to hold down the figures.
The European economy officially exited recession in the second quarter of 2013, but the labor market remains in poor health more than five years after the credit crisis struck in 2008, followed by a crisis of confidence in a number of euro zone nations, and in the common currency itself. The European Central Bank’s governing council is to meet on Thursday to plot monetary policy. In addition to the dismal employment report, the central bank will be considering a report that was issued on Monday showing that consumer prices in the euro zone had risen just 0.5 percent in March, suggesting that the euro zone was on the verge of outright deflation.
European leaders responded to those crises with austerity measures — the policy of budget discipline — the only remedy that Germany, with the union’s largest economy, would approve. That policy, which gave the European Central Bank enough cover to promise unlimited action in support of euro zone sovereigns, has calmed the markets. But the decline in government spending also hammered overall demand, undermining employment and reducing inflationary pressures.
A report on Monday showed that consumer prices in the euro zone had risen just 0.5 percent in March, suggesting that the euro zone was on the verge of outright deflation.
The central bank’s governing council is to meet on Thursday to plot monetary policy.
The European situation contrasts with that of the United States, where the unemployment rate stood at 6.7 percent in February and where the economy has been adding an average of 189,000 new posts each month over the past 12 months. The Labor Department was poised to release jobs data for March on Friday.The European situation contrasts with that of the United States, where the unemployment rate stood at 6.7 percent in February and where the economy has been adding an average of 189,000 new posts each month over the past 12 months. The Labor Department was poised to release jobs data for March on Friday.
Mr. Martinez, of Société Générale, forecast that the gross domestic product of the euro zone would increase by 1.1 percent this year. Even assuming that slow of a recovery, he said, the unemployment rate would most likely end the year around the current level.
Partly, that would reflect the return of workers who had given up on finding a job altogether, he said. The pool of discouraged workers — young people who dropped out of the job market to return to school, and long-term unemployed people in countries like Spain, Italy and France — will swell the ranks of the officially jobless as hiring picks up, keeping the official jobless rate at elevated levels, he said.