Eurozone jobless hits record high

The euro fell against the majority of its 16 most-traded peers as a report showed unemployment in the eurozone climbed to a record in February, adding to concerns that the economy will struggle to emerge from recession.

The single currency declined against the dollar as a purchasing manager index (PMI) of manufacturing stayed below the level that shows contraction.

Unemployment in the eurozone rose to 12% and the January figure was revised up to the same level from 11.9% estimated earlier, the EU’s statistics office said. This is the highest since the data series started in 1995. A gauge of manufacturing in the region slid to 46.8 last month from 47.9 in February, Markit Economics said. A reading below 50 indicates contraction.

“Euro-area PMIs are stuck in recessionary territory,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi in London.

“The ECB will acknowledge this week that the pace of economic recovery remains disappointingly weak, which will dampen upside potential for the euro.”

Spain and Greece are experiencing mass unemployment and many other countries are seeing their numbers swell to uncomfortably high levels.

A total of 19.07m people were out of work in the eurozone in February, nearly 2m more than last year. For the 27-nation EU, the jobless rate was 10.9%.

“Such unacceptably high levels of unemployment are a tragedy for Europe and a signal of how serious a crisis some eurozone countries are now in,” said employment commissioner Laszlo Andor.

Even though the eurozone has surpassed another disappointing record, for the positively inclined there was some comfort to be found.

The 33,000 increase in the number of unemployed in February was the smallest monthly rise since April 2011 and way down on the 222,000 recorded in January. Germany, Europe’s biggest economy, has an unemployment rate of only 5.4%, even better than the US rate of 7.7%.

However, the February figures came before the Cyprus crisis. The worry in the markets is that the chaos surrounding the country’s bailout has reignited concerns over the euro and may further dent confidence across the eurozone.

Unemployment in Cyprus is expected to climb as the economy contracts sharply.

Many economists are forecasting that the Cypriot economy will shrink 10% this year alone and see unemployment rise up to Greek and Spanish levels. In February, Cyprus’s unemployment stood at 14%, compared to Spain’s 26.3%.

Greece, which is in its sixth year of recession, had an unemployment rate of 26.4% in December. Its figures are compiled on a different timeframe and the actual rate in February will probably be even higher.