Eurozone Unemployment Hits New Record in May
LONDON (AP) - Unemployment in the 17-country euro currency bloc hit another record in May as the crippling financial crisis pushed the continent toward the brink of recession, official figures showed Monday.
Eurostat, the EU’s statistics office, said unemployment rose to 11.1 percent in May from 11 percent the previous month. May’s rate was the highest since the euro was launched in 1999 and adds further urgency to the eurozone countries’ plan to create economic growth and cut excessive government debt.
At a summit last Friday, eurozone leaders agreed to a limited economic growth package as well as measures to boost confidence in financial markets. Those include allowing Europe’s bailout fund to rescue banks directly, without adding to government debt, and not requesting painful new austerity measures in return for sovereign bailouts.
Investors cheered the summit’s outcome, triggering a stock market rally which, if sustained, should help buoy economic confidence in the eurozone - a key step to easing the crisis.
But the unemployment data highlighted the extent of the challenge facing European leaders.
May’s unemployment rate compares badly with an unemployment rate of 8.2 percent in the United States and 4.4 percent in Japan, and is expected to rise further in the coming months as the eurozone economy is forecast to slide back into recession this year.
Six countries in the eurozone, including Spain and Italy, are in recession - technically defined as two consecutive quarters of economic contraction. However, strong growth in Germany has prevented the eurozone as a whole from falling into recession. In the first quarter, the eurozone economy stagnated. Many economists think it will contract in the second and third quarters, putting it back into recession.
In total, 17.6 million people were out of work in the eurozone in May, up 88,000 on the month before and 1.8 million more than the level a year earlier.
"The numbers ... indicate ongoing labour market weakness, with further deterioration highly likely in the second half of the year," said Ashley James, senior European economist at RBC Capital Markets.