Euro zone unemployment crept up to its highest level in 10 years in May, data showed today, casting a shadow on prospects for any quick recovery from the worst economic recession since the second World War.
The unemployment rate in the 16-nation euro zone rose to 9.5 per cent from April's 9.3 per cent as 273,000 people lost their jobs in the month, bringing the number of those out of work to 15.013 million, European Union statistics office Eurostat said.
"For the euro area this is the highest rate since May 1999," Eurostat said of a figure higher than the 9.4 per cent expected by economists polled by Reuters and which signals a likely fragility in consumer demand that is key for recovery.
Eurostat calculated that 3.4 million people in the currency zone lost their job in the year from May 2008, with 5.1 million joining jobless queues across the EU.
The data came as the European Central Bank was meeting in Luxembourg, with economists expecting it to leave its main interest rate on hold at 1.0 percent, a record low.
The European Commission expects unemployment in the euro zone to rise to 9.9 per cent this year from 7.5 per cent in 2008 and to 11.5 per cent in 2010.
The Commission expects the euro zone economy to return to growth in year-on-year terms from the middle of 2010.
In Ireland, the unemployment rate rose to 11.9 per cent last month, with the seasonally-adjusted figure for the number of people on the Live Register up to 413,500 in June, an increase of 11,400 on May and an increase of 197,781 over 12 months.
Taoiseach Brian Cowen accepted yesterday that by the end of the year, unemployment will be in the region of 15 per cent or 15.5 per cent, or 500,000 people, and could rise again in 2010.
Spain had the highest unemployment rate in the EU at 18.7 per cent, up from 18.0 per cent in April, followed by Latvia on 16.3 per cent, up from 15.3 per cent.
In Germany, the euro zone's biggest economy, unemployment remained unchanged at 7.7 per cent, while in France, the second-biggest, it rose to 9.3 per cent from 9.1 per cent.
Separately, Eurostat said prices at euro zone factory gates logged their biggest annual fall in May, pointing to continued negative inflation in coming months.
Producer prices fell 0.2 per cent month-on-month and 5.8 per cent annually, the biggest yearly drop since the data series started in 1982. A 14.0 per cent year-on-year fall in energy prices drove the annual decline.
Economists polled by Reuters had expected producer prices to rise 0.1 per cent on the month and fall 5.6 per cent on the year.
Producer prices show inflationary pressures early in the pipeline as their moves are usually reflected later in consumer prices, which the ECB wants to grow by just under 2 per cent year-on-year.
Euro zone inflation dipped into negative territory for the first time in June as consumer prices fell 0.1 per cent year-on-year, data showed on Tuesday.
Reuters