Unemployment in Europe hits a new peak, and worse may be to come
Eurostat data released Friday showed the jobless total in the 17-nation currency area rose by 173,000 to 18.7 million in October, boosting the unemployment rate to 11.7%. That figure stood at 11.6% in September, and compares with a rate of 7.9% in the U.S.
In the 27-nation European Union, 25.9 million people were out of work, pushing the unemployment rate to 10.7%, from 10.6% in September.
Over the course of the past 12 months, the number of people who were unemployed in the eurozone rose by nearly 2.2 million, with Greece, Portugal and Spain registering the highest year-over-year increases, as they implement deep spending cuts, tax rises and reforms to reduce borrowing.
Greece, which has won more time to meet budget targets under an international bailout program, has an unemployment rate of 25.4%. Only Spain is in a worse state - with a rate of over 26% - and that number could rise further still.
Some of Spain's weakest banks are planning to shed thousands of staff in order to receive rescue funding from the EU.
While the mood among businesses has picked up a little, rising unemployment is depressing consumer confidence and households are becoming increasingly concerned about their financial situation.
Even countries such as Germany and France, which until recently had managed to ride out the economic turmoil sparked by southern Europe's sovereign debt crisis, are feeling the pinch.
German retail sales figures in October were much weaker than expected, falling 2.8% compared with September, and 0.8% year-over-year, providing further evidence that Europe's biggest economy could contract in the fourth quarter after growing just 0.2% in the third.
Consumer spending in France also fell in October, declining by 0.2% for the month and 0.5% year-over-year.
Private forecasters and the OECD are warning that the eurozone economy could contract again in 2013 as governments across the region continue to cut spending.
European Central Bank president Mario Draghi acknowledged Friday that the eurozone crisis could last well into next year.
The ECB decided earlier this month to keep interest rates at a record low of 0.75%. It meets again next week but isn't expected to cut rates again until the first quarter of 2013 at the earliest.
However, falling inflation may encourage expectations of a rate cut. Eurozone data released Friday showed price pressures falling sharply in November, with the annual inflation rate dropping to 2.2% from 2.5% in October. The ECB aims for a rate of just below 2.0%.
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