As the euro zone slipped back into recession, employment numbers dropped along with manufacturing, and the ranks of the jobless rose to about 17.13 million. That’s up 162,000 from January, and higher than at any time since June 1997—before the euro was first introduced.
Bloomberg reported that the euro zone unemployment rate rose in February, according to the European Union’s statistics office in Luxembourg, to 10.8% from January’s 10.7%, with Spain showing the highest percentage of unemployed at 23.6%. Germany’s jobless rate stayed the same at 5.7% for February from January, and in France the rate held at 10%. Provisional data from Italy showed an increase to 9.3% from 9.1%.
Cuts in jobs have led to a loss of confidence, which has in turn caused a contraction in manufacturing. Manufacturing continued to slow in March, according to a Markit Economics survey of purchasing managers, for the eighth month in a row. Markit’s manufacturing gauge came in at 47.7 for March, down from 49 in February.
“It is evident that euro zone manufacturers are still finding life very difficult amid challenging conditions,” Howard Archer, chief European economist at IHS Global Insight in London, was quoted saying of the Markit report. “Domestic demand is being handicapped by tighter fiscal policy in many euro zone countries, still squeezed consumer purchasing power, and rising unemployment.”
Germany’s manufacturing indicator fell to 48.4, its lowest level in three months, from 50.2 in February, according to the Markit report. In France, the indicator fell even further, dropping to 46.7 from 50. “There were further signs that the manufacturing malaise already exhibited at the periphery of the currency bloc was spreading to the core,” Markit said in its report. “Demand was weaker in both domestic and export markets.”
Markit also said that a new orders indicator fell faster in March than it had in February, and its employment indicator fell as well. In a statement, Chris Williamson, chief economist at Markit, said, “The prospects for April also look poor, with companies reporting steeper rates of decline for both new orders and backlogs of work. At the same time firms saw their production costs rise sharply, largely as a result of high oil prices.”