Unemployment across 17 nations rose by 60,000 in September to 19.4 million – the 29th consecutive monthly increase
Pressure is mounting on the European Central Bank to boost activity in the euro area after the latest figures showed a fresh rise in unemployment, and inflation dropping sharply to a four-year low.
The jobless total for the 17 nations that use the single currency rose by 60,000 in September to 19.4 million – the 29th consecutive monthly increase. Unemployment is a million higher than in September 2012 and up by almost four million since the spring of 2011.
At 12.2%, the jobless rate was the highest since monetary union began at the end of the 1990s, according to data from Eurostat, the EU's statistical agency.
Analysts said the labour market in the euro area had yet to stabilise despite the return of modest growth in recent months. Jobless rates range from 4.9% in Austria and 5.2% in Germany to 26.6% in Spain and 27.6% in Greece, with unemployment in Italy rising to a record high of 12.5% in September. The jobless total in France also rose, up by 34,000 in September and by almost 250,000 in the past year.
Unemployment among the under-25s rose by 22,000 in September to 3,548,000 – nudging up youth jobless rate to 24.1%. In France, the youth jobless rate jumped from 25.6% to 26.1%, while in Italy it increased from 40.2% to 40.4%.
Meanwhile, separate figures from Eurostat showed the euro area's inflation rate dropping from 1.1% to 0.7% – well below the ECB's target of keeping it just under 2%.
In contrast to Britain, where dearer gas and electricity bills are pushing up the cost of living, cheaper energy was a big factor in reducing inflation across the euro area. UK inflation, at 2.7%, is now two percentage points higher than in the single currency zone.
Chris Towner, director at foreign currency specialists HiFX, said: "Inflation data from the EU this morning shocked the market as the rate fell alarmingly from 1.1% to just 0.7%, which is the lowest level seen in four years.
"With a strong currency it looks like the risks are increasing for the EU to fall into a 'Japan-like' deflationary spiral, and the ECB may need to act soon and cut rates again."
Nick Kounis, head of macro research at ABN AMRO, said: "This raises the question of whether this will prompt a response from the central bank, given that its price stability goal is supposed to be symmetrical. There is certainly a strong case for the ECB to put in place a yet more aggressive monetary easing stance to guard against risks of inflation settling at too low levels. However, there seems to be strong resistance in some corners of the governing council, especially from some of the northern states."
Howard Archer, economist at IHS Global Insight, said: "An inflation rate of 0.7% could easily be seen as warranting an interest rate cut in itself, and the rise in unemployment heaps further pressure on the ECB to act, but we doubt that the bank will do so at its 7 November meeting.
"There is clearly a strong faction within the ECB's governing council against taking interest rates below 0.5% while the bank can also point to overall evidence that the eurozone is continuing to grow modestly after exiting recession in the second quarter.
"The ECB will likely limit its action at its November policy meeting to reiterating its forward guidance that it 'expects the key ECB interest rates to remain at present or lower levels for an extended period of time'.
"However, latest developments reinforce our view that the ECB will end up cutting interest rates from 0.50% to 0.25% sooner or later. Indeed, we certainly would not rule out a cut in December, although the ECB may hold off acting until the early months of 2014."
Eurozone crisisEuropean UnionEuropean monetary unionEconomicsBankingEuropean banksFinancial crisisFinancial sectorEuroEuropeEuropean Central BankUnemployment and employment statisticsEuroLarry Elliotttheguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds |
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