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Joblessness hits new high in Euro bloc

07 August 2012 13:38 (UTC +04:00)

Baku â€“ APA-Economics. Unemployment in the 17 countries that share the euro hit another record in June, a development likely to further weaken consumer spending and add pressure on the European Central Bank’s governing council to take action at its monthly meeting Thursday, the Wall street Journal reported.
The number of unemployed people in the currency area rose by 123,000 to 17.801 million in June, its highest level since records were first compiled in 1995, European Union statistics agency Eurostat said.
Consumer prices rose at an annual rate of 2.4% in July, Eurostat said in a separate release, the same rate of increase as in June and well above the ECB’s target rate of a little below 2%.
The combination of rising unemployment and high inflation is eating into euro-zone households’ spending power. German retail sales recorded a small decline, with much larger drops in Spanish and Greek sales, figures released by national statistics agencies showed. French consumer spending increased modestly.
The rise in unemployment meant 11.2% of the euro-zone work force was without a jobâ€”a tie with the previous high, after the estimate for May’s jobless rate was raised to 11.2% from 11.1%.
The high jobless figures come days before policy makers at the ECB meet to decide whether to ease monetary policy further to try to stimulate the economy, which has been hit by government austerity and falling confidence as leaders struggle to find a lasting solution to the debt crisis.
The central bank in July cut its key interest rate to a record low of 0.75%. Economists don’t expect another rate cut Thursday, though speculation the ECB could take some form of action to stabilize government bond markets has grown since its President Mario Draghi a week ago said the bank would do "whatever it takes" to preserve the euro.
High unemployment and flagging economies exacerbate the debt crisis by curbing tax revenues, pushing up spending on jobless benefits and angering voters.
Rising unemployment is grim evidence of how the euro-zone crisis is affecting ordinary people and the wider economy. Government-spending cuts and tax rises aimed at stemming debt levels have combined with poor consumer and business confidence to spark a slowdown across the bloc.
Half a dozen euro-zone nations already are in recession, including the countries at the heart of the crisis, such as Greece, Portugal and Spain.

Spain on Monday had reported a third straight quarter of shrinking economic output between April and June.
Investors are speculating that the country could become the fifth to need a sovereign bailout, despite already having requested billions of euros in a credit line for its banks.
Other data from around the currency bloc Tuesday showed weakness isn’t confined to these troubled nations.
Europe’s largest economy, Germanyâ€”which has bankrolled much of the bailout efforts to stem the crisisâ€”suffered a rise in its jobless tally in July, albeit modest. The jobless rate held firm at 6.8% in July after a second straight 7,000 rise in jobless claimants, the country’s labor agency said. The figures are more timely than those of Eurostat, which were for the month before.
German retail sales fell for the third straight month in June, by 0.1% month-to-month, statistics bureau Destatis said. That follows a 0.3% decline in May and suggests consumers retrenching as the economy’s prospects sour.
Compared with June 2011, retail sales were up 2.9%. In Spain and Greece, retail sales were down sharplyâ€”on an annual basis by 5.2% and 8.8%, respectively.
Consumer spending in France, the second-largest economy, edged up by 0.1% in June from May, official statistics agency Insee said. But over the second quarter, spending fell 0.2% compared with the January to March period.
The spending data is consistent with a fall in French gross domestic product in the second quarter, said Marion Laboure, economist for Barclays. France posted zero growth in the first quarter.