Twin reports are showing new economic weakness in the 17-nation euro currency bloc, with the jobless rate reaching a record level and manufacturing activity unchanged at a three-year low.
The European Union said Monday the eurozone’s unemployment rate edged up in May to 11.1 percent, the highest rate since the euro was launched in 1999. More than 17 million workers are unemployed, up nearly two million compared to a year ago.
Nearly one of every four workers are unemployed, and more than half the country’s young people jobless.
Meanwhile, a key survey by the research firm Markit Economics showed that manufacturing in the eurozone in June remained well below the level that indicates production growth – and at the lowest point since June 2009.
Markit economist Rob Dobson said that as manufacturing has weakened, the labor market has fallen as well.
“The employment numbers – we’re also starting to see them come down as well, including in Germany,” he said. “Indeed, all countries within that survey reported a decline in employment apart from Ireland. So what we’re seeing is weakness in the output coming through into the labor market, which is going to be a bad thing for the economy heading forward.”
For months, the eurozone economy has been stagnant, with austerity measures imposed by governments seeking to rein in their deficit spending curtailing growth. In a new tack to spur the region’s economy, European leaders last week agreed to a $150 billion package to promote development. They also adopted policies to ease the borrowing costs for Italy and Spain.
Some analysts are predicting that the European Central Bank, in a further attempt to improve the eurozone economy, will cut its key lending rate later this week by a quarter of a percentage point – from 1 percent to three-quarters of a percent.
Meanwhile, central bank official Joerg Asmussen said in Athens that Greek officials need to concentrate their efforts on adhering to the austerity measures they already agreed to, rather than trying to ease the terms of their $168 billion international bailout, the country’s second in two years.
“So my point is this: the new government should not lose precious time looking to avoid or loosen the program. It should instead focus on how to maximize the effectiveness of reforms,” he said.