Euro-Area Unemployment at 12.1% Shows Economic Struggles

By Stefan Riecher Jan 8, 2014 5:47 AM CT
Photographer: Mario Proenca/Bloomberg

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Euro-area unemployment held at a record in November as policy makers struggled to bolster the recovery from the currency bloc’s longest recession.

The jobless rate remained at 12.1 percent, the European Union’s statistics office in Luxembourg said today. That’s in line with the median estimate in a Bloomberg News survey of 26 economists. After several revisions of previous months’ data, unemployment has been stable at that level since April.

While unemployment remains resistant to policy makers’ attempts to boost the economy, positive signs are gradually accumulating. Separate data today showed euro-area retail sales and German factory orders rose more than forecast in November, while data tomorrow may show economic confidence in the currency bloc improved in December.

There is “very limited momentum in the euro area labor market,” said Timo del Carpio, an economist at RBC Capital Markets in London. “Despite gradually improving macro conditions, the pace of recovery in our view falls short of that necessary to make a measurable dent in unemployment.”

Euro-region retail sales increased 1.4 percent in November from the previous month, beating analysts’ estimates and rebounding from two months of declines. From a year earlier, sales were up 1.6 percent. In Germany, manufacturing orders surged 2.1 percent in November, also ahead of forecasts.

Photographer: Konstantinos Tsakalidis/Bloomberg

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Lagging Market

The euro declined against the dollar today and was down 0.2 percent at $1.3584 as of 11:22 a.m. London time.

Europe’s fragile labor market remains a major concern for EU leaders as they try to foster the recovery. Last month, they acknowledged that the jobless rate remains “unacceptably high,” especially among young people, 18 months after they unveiled a 120 billion-euro ($163 billion) package to jump-start the economy and create jobs.

“The labor market is lagging behind the economic recovery in the euro area,” Carsten Brzeski, an economist at ING Group NV in Brussels, said by telephone. “It will take at least until the middle of the year until we’ll see significant improvement.”

The European Central Bank estimates that the euro-area economy will expand 1.1 percent this year after contracting 0.4 percent in 2013. Unemployment will average 12.1 percent this year and 11.8 percent in 2015, economists forecast in a separate Bloomberg survey.

 

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