Jobless rate in eurozone hits record high of 11.3pc
Published 01/09/2012 | 05:00
EURO-area unemployment rose to a record and inflation quickened more than economists forecast as rising energy costs threaten to deepen the economic slump.
The jobless rate in the eurozone economy was 11.3pc in July, the same as in June after that month's figure was revised higher, the EU's statistics office in Luxembourg said yesterday. That's the highest since the data series started in 1995. Ireland's jobless rate is the fifth highest in the eurozone.
Inflation accelerated to 2.6pc in August from 2.4pc in the prior month, an initial estimate showed in a separate report.
Rising unemployment is likely to limit inflationary pressures in the coming months, in what the ECB might see as an argument in favour of a rate cut at Thursday's rate-setting meeting.
"The whole eurozone is undergoing negative growth developments," said Don Smith, a UK-based economist at ICAP.
"The sense is that increasingly the eurozone crisis is bearing down on countries in northern Europe and Germany in particular and this is really forcing officials' hands toward coming up with a firm solution."
With the economy cooling and executives and consumers growing more pessimistic, companies may find it difficult to pass on higher prices and instead focus on cost cuts.
In Germany, Europe's largest economy, which helped soften its slowdown in the first half of the year, indicators are also weakening. The number of people out of work in Germany increased a seasonally adjusted 9,000 to 2.9 million in August.
"This is the first time the euro-area inflation rate has accelerated since September last year, and we think that it should rise further in September," Francois Cabau, an economist at Barclays Capital, wrote in a research note.