Euro zone unemployment jumped to a 44-month high in March on the back of the worst European recession since World War Two, likely offsetting the beneficial effects on household demand of record low inflation.
The number out of work in the 16 countries using the euro rose 419,000 to 14.158 million - or 8.9 per cent of the workforce, up from a revised 8.7 per cent in February, data from European Union Statistics office Eurostat showed.
Unemployment was last at 8.9 per cent in July 2005 and economists expect it to reach 10 per cent by the end of 2009 and 11 per cent next year after German data for April showed a sixth straight month of layoffs.
German data showed the rate in Europe's biggest economy jumped to 8.3 per cent in April from 7.6 per cent in March.
“Given the general trends in recent months throughout the euro area, and based on the increase in German unemployment for April reported earlier today, the euro area unemployment rate now looks likely to have reached at least 9.1 per cent in April," said James Ashley of Barclays Capital.
Joblessness in France rose to 8.8 per cent from 8.6 per cent while Spain saw the steepest jump - to 17.4 percent from 16.5 per cent. In Ireland it rose to 10.6 per cent from 10 per cent.
Unemployment is rising fast as the euro zone struggles with the worst recession since the Second World War. The International Monetary Find expects the euro zone economy to contract 4.2 per cent this year and 0.4 percent in 2010.
But even if 2010 will be better, the labour market will react with a delay, European Central Bank Executive Board member Lorenzo Bini Smaghi said in Florence.
"From the forecasts... we know that towards the start of next year the slowdown in the real economy will stabilise," Bini Smaghi said. "The impact on unemployment will continue."
Reuters