Eurozone unemployment hits 11-year high

Discussion in 'Economics' started by ASusilovic, Dec 1, 2009.

  1. Unemployment in the eurozone reached its highest level in more than a decade in October, as employers continued to cut jobs despite tentative signs of economic recovery.

    The uninterrupted rise in the number of jobless since February 2008 has pushed the unemployment rate to 9.8 per cent, the same as September figures, which on Tuesday were revised upwards from 9.7 per cent on a seasonally-adjusted basis.

    Countries in the eurozone now have 15.6m unemployed, the most since the European Commission started compiling data in the mid-1980s, and up 3m on a year ago.

    The headline figure hides considerable divergence in joblessness at national level. Dutch unemployed remains well below 4 per cent, whereas nearly one in five workers in Spain are looking for a job.

    The rise in joblessness is also uneven across the 16 countries that use the euro. Unemployment in Germany is at the same level as it was at the start of the economic crisis, and actually fell last month, to 7.5 per cent. France and Italy are still shedding jobs, however.

    Despite a return to economic growth in the third quarter, economists expect unemployment to keep rising for the first half of 2010, reaching a high of around 11 cent.

    “Surveys of hiring intentions still foreshadow more job-shedding in the months ahead,” said Martin van Vliet, economist at ING.

    James Ashley at Barclays Capital said: “The evidence of labour hoarding elsewhere in the euro area means that there is scope for significant further increases in unemployment in Germany, France and Italy… The euro area labour market adjustment is yet far from complete.”

    Meanwhile, a closely-watched poll of eurozone purchasing managers in the manufacturing sector conveyed more bullish sentiment on the ground.

    Growth of output and new work received was the fastest for more than two years, and manufacturing production was the highest in four months, according to Markit, a data provider.

    Though stocks of finished goods fell for the eleventh-month running, exports rose and backlogs of work also increased; companies continued to shed jobs in all parts of the manufacturing sector.

    The jobless recovery continues...
  2. But we must maintain strong vigilance on price! Price stability is crucial towards sustainable growth.

    Right, JC?
  3. Agreed on both counts.

    And furthermore, I think a real "second order" worry for the Eurozone (in addition to the "first order" worries you highlight like unemployment and inflation) is the strain on Eurozone structures created by the diverging recoveries (and lack thereof) of countries like Germany and Spain.

    The ECB is already being pulled in many directions ... hard to see how one medicine will work for all?
  4. I think you're spot on, and that has been the conundrum that probably keeps JC up at night.

    All you have to do is look at the sovereign credit spread between BRICs and PIIGS right now (Portugal, Italy, Ireland, Greece and Spain: the Eurozone's weakest legacy links) to see the developing story.


    Source: ZH
  5. The increase in unemployment is a sign of economic improvement. Since were dealing with a balance sheet recession here cost savings retained by laying off workers is a necessary step to clean up balance sheets. It'll take a few years of debt monitization by the Fed and debt reduction by companies to get corporate balance sheets back in order. During this period we won't see economic growth, but times of drastic uncertainty like we had last year are behind us.

    It's an opportunity for emerging markets to take over the growth stick from the developed world and it's an opportunity for speculators to create market bubbles by leveraging on those market's tiny floats. Fun times are ahead.
  6. Hope you're right, but don't think so. You've also essentially left out the driving engine of consumer spending - which, last I checked - makes up the majority of growth in this, and other countries.

    Cost cutting can only take us so far, and I happen to think we've hit that wall already.
  7. Oh yes trust a "Eurozone" paper... Sure the FT is pretty good, but stayed the same!

    "Die Arbeitslosenquote in der Eurozone hat sich im Oktober wider Erwarten nicht erhöht"

    In other words folks were expected an increase, but there was none.

    So if you want to talk about how "bad" things choose another statistic.

  8. I can make the same argument on the American economy.

    Alaska, California, Florida, Texas, Washington, and New York states all have very diverging economies. California could even be its own country. Heck most of the states could be their own country. YET the fed manages to create a policy that spans all of the states.

    The Eurozone is behaving very much like the states. Some are doing well, others not so...

  9. Well the drastic uncertainty last year was caused by people thinking the banking system would collapse. The government disproved that scenario by showing that it was able to print and throw bundles of cash at the banks in order to repair their balance sheets. This ruled out a complete collapse.

    The next stage will be corporate cost cutting and paying down debt. Eventually this will repair the problem that caused the crisis - too much debt. It'll take a few years though.
  10. In other words... "Inflate or die"... to maintain the APPEARANCE of growth.. (Unstable prices which are falling = BAD. Unstable prices which are rising = GOOD.)
    #10     Dec 1, 2009