Eurozone Unemployment Hits New Record HighVW Staff
Official figures from Eurostat, EU’s statistics office, show that unemployment in the debt-immersed Eurozone rose to a record high of 11.6 percent in September. The high unemployment rate, coupled with struggles to reduce government spending, underscored the uncertain nature of the economy in the Eurozone. In August, Eurostat had recorded an upwardly-revised unemployment rate of 11.5 percent. This 0.1 percent increase in September, though seemingly small, had material effects on the number of people out of work. In September 18.49 million people were unemployed, up 146,000 from Augusts’ number.
Performance in different countries in the Eurozone varied. Nevertheless, it is believed that Spain tagged the tail. Back in July, its unemployment rate stood at 25.8 percent, a few percentage points ahead of Greece, which had a rate of 25.1 percent. Greece and Spain have been the point of central focus during the three year debt-crisis. Both of the two countries have youth unemployment above 50 percent, signaling some real economic woes among the younger generation. Austria and Germany on the other hand are believed to be doing reasonably well, considering the state of the Eurozone. The former has the lowest unemployment rate of 4.4 percent, while Germany, which is Europe’s biggest economy, has an unemployment rate of 5.4 percent.
The lackluster performance in the Eurozone suggests that the region may be slipping into a recession. As of the moment, five countries are already in recession- Portugal, Spain, Greece, Cyprus, and Italy. The Eurozone is expected to be confirmed to be in a recession in mid-November, when the first estimate of economic activity in the region is published. A recession, which is marked by two consecutive quarters of negative growth, will worsen the Eurozone’s current situation.
Separate reports from Eurostat, however, show that inflation was reduced considerably, coming in at 2.5 percent from the previous 2.6 percent. However, inflation still needs to drop a bit lower to be below European Central Bank’s target of 2 percent. Despite the above-target inflation, the ECB has not restrained from cutting its interest rate to an unprecedented low of 0.75 percent. Economists however believe that the ECB will not cut the rate any lower at next week’s monthly meeting.
The steady rise in the Eurozone’s unemployment rate has been documented all year round. The region is neck-deep in debt and prospects continue to flee. The same can however not be said about the U.S. Despite internal pressure and external macro factors, the U.S unemployment rate fell to 7.8 percent in the latest report. Economists are now waiting for the latest figures, which are expected to be released this Friday.