Eurozone joblessness hits new record of 11.1%

Unemployment in the 17-country eurozone hit another record in May as it continued to be buffeted by its debt crisis.

Eurostat, the EU’s statistics office, said that the jobless rate rose to 11.1% in May from 11% the previous month. That is the highest since the euro was launched in 1999.

Unemployment has been edging higher for over a year now as concerns over the debt crisis have weighed on economic activity. The highest unemployment rate was recorded in Spain, where nearly one in four people are out of work, closely followed by Greece.

In total, 17.6 million people were out of work in the eurozone in May, 1.8 million higher than the year before.

At a summit last Friday eurozone leaders agreed a set of short- and long-term measures to shore up the euro and unveiled a limited economic growth package. Markets have responded positively with a stock market rally which, if sustained, should help buoy economic confidence in the eurozone - a key step to easing the crisis.

May’s unemployment rate compares badly with an unemployment rate of 8.2% in the United States and only 4.4% in Japan, and is expected to rise further in the coming months as the eurozone economy teeters on the edge of recession.

“With the eurozone likely having suffered appreciable GDP contraction in the second quarter and in grave danger of contracting again in the third, and with eurozone business confidence generally low and fragile, the likelihood is that the eurozone unemployment rate will move significantly higher over the coming months,” said Howard Archer, chief European economist at IHS Global Insight.