Eurozone unemployment hits record 12.2 pct

Friday, May 31st, 2013 | Finance News

BRUSSELS (AP) — Unemployment across the 17 EU countries that use the euro hit another record high in April, official figures showed Friday, the latest in a series of ignominious landmarks for the ailing single currency zone.

Eurostat, the EU's statistics office, said Friday that unemployment rose to 12.2 percent in April from the previous record of 12.1 percent the month before. Another 95,000 people joined the ranks of the unemployed, taking the total to 19.38 million. At this pace, unemployment in the eurozone could breach the 20 million mark this year.

The figures, once again, mask big disparities among countries. While over one in four people are unemployed in Greece and Spain, Germany's rate is stable at a low 5.4 percent.

The differences reflect the varying performance of the euro economies — Greece, for example, is in its sixth year of a savage recession. Germany's economy has until recently been growing at a healthy pace.

As a whole, the eurozone is in its longest recession since the euro was launched in 1999. The six quarters of economic decline is longer even than the recession that followed the financial crisis of 2008, though it's not as deep.

Part of the cause has been European governments' focus on cutting debt by raising taxes and slashing spending programs.

With many governments still pulling back on spending and business and consumer confidence still low, economists do not expect any dramatic recovery to emerge over the coming months.

The European Central Bank has sought to make life easier for Europe's hard-pressed businesses and consumers by cutting its main interest rate down to the record low 0.5 percent earlier this month.

Another cut is possible, though unlikely, economists say, even though the inflation rate still stands below the ECB's target of just below 2 percent. The ECB is more likely to take measures to shore up lending to small and medium-sized businesses, one of the main job creators.

Separately, Eurostat said Friday that inflation in the eurozone rose to 1.4 percent in the year to May from 1.2 percent the previous month. It blamed rising food, alcohol & tobacco prices for the uptick.