Jobless rate in eurozone hits record 11.1 per cent

The eurozone debt crisis delivered more bad news yesterday with data showing a record high unemployment rate of 11.1 per cent and the manufacturing outlook at the lowest levels for three years.

Unemployment hit its highest rate since the eurozone was created in 1999 and analysts warned job queues would likely continue to lengthen in coming months.

More than 17.5 million people were jobless in the 17-nation single currency area in May, as 88,000 more men and women lined up for work. Spain was the hardest hit with almost one in four unemployed, according to Eurostat data agency.

Youth unemployment again surged, with 3.4 million people under 25 looking for work, an increase of 254,000 from 12 months earlier.

“It was of little real comfort that May’s rise in unemployment was actually the smallest for 11 months,” said economist Howard Archer of IHS Global Insight.

A key survey showed manufacturing activity remaining at its lowest level since the summer of 2009, with the second quarter registering the biggest contraction for three years.

“We fear that the ‘growth pact’ agreed by EU leaders last week will not be enough to foster a sustained recovery – and that more is likely to be needed, starting with an ECB rate cut on Thursday,” said Martin van Vliet of ING.

European Union leaders agreed at the summit on Thursday and Friday on growth measures to offset austerity reforms imposed on debt and deficit sinners that some say have choked struggling economies.

Mr van Vliet said the pace of reform should be slowed if politically feasible.

Both the employment data and bleak manufacturing PMI figures released on Monday raised “the risk of eurozone unemployment reaching 12 per cent,” he said.

At 11 per cent in March and April, the unemployment rate in the eurozone has remained above 10 per cent for 13 months as the bloc struggles to revive economies contaminated by a debt crisis now in its third year and threatening large members Spain and Italy.

In the wider 27-nation European Union, unemployment rose to 10.3 per cent against 10.2 in April, the same level as March. About 24.86 million men and women were jobless in the EU as unemployment increased by 151,000 people.

Spain recorded again the worst unemployment rate at 24.6 per cent, with more than one in two people under 25 without work.

Greece was next at 21.9 per cent in March, the latest available figures for that country, followed by Latvia at 15.3 per cent in the first quarter and Portugal at 15.2 per cent in May.

Austria has the lowest rate at 4.1 per cent, followed by The Netherlands at 5.1 per cent, Luxembourg at 5.4 per cent and Germany at 5.6 per cent.

The Purchasing Managers Index, a survey of 3,000 manufacturers compiled by Markit research firm, remained unchanged in June from May at 45.1 points, from 45.9 in April.

That showed the largest rate of decline in manufacturing in the second quarter since the same quarter of 2009.

The survey is an important leading indicator of activity.

“Companies are clearly preparing for worse to come, cutting back both on staff numbers and stocks of raw materials at the fastest rates for two-and-a-half years,” said Markit economist Chris Williamson.