Eurozone employment rate stays at 11% in February

Eurozone unemployment stayed at 11.9% in February, highlighting the region’s uneven recovery as Germany’s labour market strengthened and Italy’s jobless rate reached a record.

The jobless rate was revised lower in January and in the prior two months from 12%, the EU statistics office in Luxembourg said yesterday. Economists had forecast 12% for February, according to the median of 32 estimates in a Bloomberg News survey.

In Italy, the unemployment rate reached a record 13%, while the number of Germans out of work fell in March, according to separate reports.

That divergence underscores the challenge faced by the European Central Bank’s governing council this week as it meets to assess the risk of deflation in the region at a time when consumer prices are increasing at about a quarter of the pace that officials are aiming for.

“The unemployment rate will remain broadly stable this year as the rise in employment is too modest to trigger a significant decline,” Apolline Menut, a London- based analyst at Barclays, said before yesterday’s data.

“More worrying is the contagion from short-dated to more medium-term inflation expectations as further downward moves could push an already late ECB into loosening monetary policy further.”

Separate data yesterday showed eurozone manufacturing activity stayed close to the highest since 2011. Last week, economic confidence increased more than analysts forecast in March as an index of executive and consumer sentiment rose to the highest since July 2011.

French carmaker Renault plans to hire at its Valladolid plant in Spain to increase output and executives from Germany’s BMW last week said that they see potential in Europe for new models amid a gradual economic recovery.

Still, Europe’s fragile labour market remains a concern for its leaders with February unemployment rates varying from a low of 4.8% in Austria to 25.6% in Spain. Greece, which last reported in December, had a jobless rate of 27.5%. Among people under the age of 25, unemployment in the 18-nation currency bloc stands at 23.5%.

“Weak inflation in March and continued difficulties on the labour markets are already well anticipated by the ECB,” said Anatoli Annenkov, senior economist at Societe Generale. “What’s needed in Europe is to see a trend break in unemployment and faster job creation, but more structural reforms will be needed for that.”

ECB president Mario Draghi last week said the bank’s accommodative monetary policy should increasingly have an impact as disruptions in the financial system wane. Even so, it is determined to act if ‘downside risks’ appear, he said.

— Bloomberg