EU business morale rising but jobless rate hits record high
Business morale in the eurozone improved again in December, but unemployment hit a record high and households held back from spending before Christmas, suggesting the bloc's emergence from recession will be slow.
Economic sentiment in the 17 countries using the euro rose by 1.3 points to 87 in the second straight month of gains after almost a year of falls, the European Commission's monthly business and consumer survey showed yesterday.
Optimism that the eurozone is beginning to recover from a deep banking and public debt crisis was tempered by data showing the jobless rate in November was at its highest level since the euro was introduced in 1999.
"A growing number of businesses are beginning to see light at the end of the tunnel, but consumers remain very gloomy," said Martin Van Vliet, an economist at ING in Amsterdam. "Consumer spending is crucial to ensure a sustainable recovery," he said, forecasting a stagnant economy in 2013.
Unemployment rose to 11.8pc of the working population or 18.82 million people, and 113,000 more people were without a job than in October, the EU's statistics office Eurostat said, as companies ranging from carmakers to retailers cut staff.
Ireland continued to have the fourth highest rate inside the European Union with 14.6pc of the labour force saying they were jobless in November, trailing behind other bailed-out countries Spain and Greece, both with 26.6pc, and Portugal with 16.3pc.
The biggest rise in unemployment over the past year took place in Greece, where joblessness soared to 26pc in September, up 7.1 percentage points over September 2011's 18.9pc. But the highest overall rate in the EU was in Spain, where 26.6pc of the workforce was jobless in November, up 3.6 percentage points over last year. Italy's jobless rate was steady at 11.1pc.
By contrast, Austria posted the lowest unemployment rate in the EU, at 4.5pc.
Feeble demand was also evident in retail trade data that was released by Eurostat yesterday, showing a mere 0.1pc rise in sales volumes in November from the previous month.
Another month of falls was only avoided in November because European motorists spent more on fuel. Sales of food and drinks fell even in the run-up to the year's busiest shopping season.
While business morale has been helped by a series of steps to prevent the break-up of the eurozone, rising unemployment and stalled consumer spending underscore just how difficult the eurozone's economic recovery will be.