Euro zone unemployment rate hits record high

The euro-area jobless rate rose to a record in January as austerity measures taken to counter the debt crisis deepened the currency bloc's recession.

Unemployment in the 17-nation euro area rose to 11.9 per cent from a revised 11.8 per cent in December, the European Union's statistics office in Luxembourg said today, the highest since the data series started in 1995.

"The situation is very serious," said Alexander Krueger, chief economist at Bankhaus Lampe in Dusseldorf.

"There's no support any more from Germany. It's more or less a sideways movement which I expect to continue. Other economies like Italy, Spain and Portugal are very bad at the moment, so in the end the unemployment rate can only climb."

The euro-area economy recorded its worst performance in four years in the fourth quarter with a contraction of 0.6 per cent. Gross domestic product will decline again in the first three months before returning to growth in the second quarter, according to the median of 21 economists' estimates in a separate Bloomberg survey.

The European Commission forecasts unemployment rates of 12.2 per cent and 12.1 per cent for this year and next. German-Inspired Austerity Businesses ranging from banks to car makers and airlines are trying to cut costs by shedding jobs.

Air France-KLM Group last week said it narrowed its full-year operating loss to €300 million in 2012 after cutting 3,300 jobs. Italian voters rejected the German-inspired austerity put into practice by outgoing prime minister Mario Monti, denying a majority in parliament to front-runner Pier Luigi Bersani in a February 24th-25th election and throwing the country into political chaos.

Mr Monti blamed crisis-management mistakes at the European level for his defeat. EU leaders called on Italy's rival factions to form a government committed to budget rigor. Today's report showed that 18.998 million people were unemployed in the euro area in January, up 201,000 from the previous month.

The data also showed that youth unemployment is at 24.2 per cent, with Spain's rate more than double that, at 55.5 per cent. Italy's unemployment rate rose to 11.7 per cent from 11.3 per cent, while Germany's held at 5.3 percent.

French unemployment edged higher to 10.6 per cent. At 26.2 per cent, Spain had the highest jobless rate in the currency bloc among those countries reporting January data, while Austria had the lowest rate at 4.9 per cent.