Europe Unemployment Rate Rises More Than Expected (Update1)
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By Jurjen van de Pol
April 1 (Bloomberg) -- European unemployment increased more than economists expected in February to the highest in almost three years as the recession forced companies across the continent to cut output.
The jobless rate in the euro zone rose to 8.5 percent from a revised 8.3 percent in January, the European Union’s statistics office in Luxembourg said today. The February reading is the highest since May 2006 and exceeded the 8.3 percent rate economists forecast, according to the median of 23 estimates in a Bloomberg News survey. The January figure was revised higher from 8.2 percent reported on Feb. 27.
Employers throughout the region are reducing production and postponing investments as the global slump cuts demand, forcing them to fire workers. The Organization for Economic Cooperation and Development yesterday said the combined economy of its 30 member nations will contract 4.3 percent this year, the most in more than 50 years.
“Euro-zone unemployment is still rising at an alarming pace,” said Jennifer McKeown, an economist at Capital Economics Ltd. in London. “The downturn in the labor market is already the most severe in the region’s history,” she said, adding that “there is a further downturn to come.”
Leaders from the Group of 20 emerging and developed nations will meet in London tomorrow to try to forge a common response to the crisis. U.S. calls for European nations to spend more on fiscal stimulus have met with some resistance by government’s trying to keep their budget deficits under control.
Investor Confidence
Europe’s manufacturing industry contracted more than estimated in March as the deepening economic slump eroded export demand and investor confidence, a survey of purchasing managers by Markit Economics showed today. Unemployment in Germany, Europe’s largest economy, rose more than economists forecast in March as foreign and domestic demand weakened, the government said yesterday.
Heidelberger Druckmaschinen AG, the world’s largest maker of printing presses, plans to fire 5,000 workers, about a quarter of the workforce, as it lowers costs to counter slumping orders, the company said last week. Royal KPN NV, the biggest Dutch phone company, plans to cut about 10 percent of jobs at its Getronics computer-services unit as demand weakens.
The European Central Bank remains under pressure to step up efforts to spur lending and boost the region’s economy after it cut its key rate by one-half percentage point to a record low of 1.5 percent last month. The Frankfurt-based bank will lower the benchmark rate to 1 percent at a meeting tomorrow, according to a Bloomberg survey of economists.
ECB Vice President Lucas Papademos said on March 26 that the central bank may offer banks longer-term loans and could also buy corporate debt to boost the economy. The bank has so far resisted using additional policy tools such as buying corporate bonds. |
