European May Unemployment Rate Rises to Highest in a Decade
July 2 (Bloomberg) -- Europe’s unemployment rate rose to the highest in a
decade in May as airlines, banks and builders cut jobs to survive a recession
that’s led to soaring losses and fueled bankruptcies.
Unemployment in the 16-member euro region increased to 9.5 percent from a
revised 9.3 percent in April, the European Union statistics office in
Luxembourg said today. That’s the highest since May 1999 and compares with a
median forecast of 9.4 percent from a Bloomberg survey of 29 economists. A
separate report showed European producer prices fell by a record 5.8 percent in
May from a year earlier.
Even as Europe’s economy shows signs of recovery from the worst recession since
World War II, unemployment will continue to climb, according to forecasts from
the European Commission and the Organization for Economic Cooperation and
Development. ING Groep NV, the largest Dutch financial-services company, said
yesterday it would eliminate a further 800 jobs in addition to 7,000 already
announced.
“We see unemployment carrying on and increasing for some time yet, into next
year as well,” said Jennifer McKeown, an economist at Capital Economics Ltd. in
London. While there are signs that the slump is easing, “unemployment tends to
lag developments in the wider economy.”
Air France-KLM Group Chief Executive Officer Pierre-Henri Gourgeon said on June
19 that he expects to extend job cuts at the company. In Germany, Europe’s
largest economy, company insolvencies led to 254,000 job losses in the first
half of the year, according to debt collection agency Creditreform e.V.
Prices Fall
The annual decline in producer prices in May was the biggest since the data was
first compiled in 1981 and exceeded the 5.6 percent median forecast of 21
economists in a Bloomberg survey. From the previous month, prices fell 0.2
percent.
Prices at the consumer level in the euro area recorded their first annual
decline in June, according to data this week, and the European Central Bank has
said inflation will probably remain negative for a few months before rising
later in the year.
The Frankfurt-based central bank, which has cut its benchmark interest rate to
a record low of 1 percent, will probably leave the rate unchanged at a meeting
today, according to a survey of economists.
ECB President Jean-Claude Trichet said June 4 that the worst of the recession
may have passed. Business confidence in Germany rose to a seven-month high in
June and the contraction in manufacturing and services is easing, reports last
month showed.
Still, the euro-region economy will shrink 4.8 percent this year and stagnate
in 2010, the OECD forecast on June 24. That will push unemployment to 12
percent next year, it said. The EU sees unemployment reaching 11.5 percent in
2010, with the highest rates expected in Spain and Ireland.
Spanish unemployment rose to 18.7 percent in May, the highest in the 27-nation
EU, today’s report showed, while the jobless rate in Ireland increased to 11.7
percent.
