1 Dec 2012

More now out of work in eurozone

5:57 am on 1 December 2012

Unemployment in the eurozone reached a new record in October, while consumer price rises slowed sharply.

The jobless rate in the zone rose to 11.7%. Inflation fell from 2.5% to 2.2% in November.

The unemployment rate reached 11.7% in October, up from 11.6% the month before and 10.4% a year ago.

A further 173,000 were out of work across the zone, bringing the total to 18.7 million.

The BBC reports the respective fortunes of northern and southern Europe diverged further.

In Spain, the jobless rate rose to 26.2% from 25.8% the previous month and to 11.1% in Italy from 10.8%.

In contrast, unemployment in Germany held steady at 5.4% of the labour force, while in Austria it fell from 4.4% to 4.3%.

European Central Bank president Mario Draghi warned on Friday that the eurozone will not emerge from its crisis until the second half of next year.

Government spending cuts would continue to hurt growth in the short-term, he said.

The real problem is that we have a two-speed Europe," Royal Bank of Scotland economist Alberto Gallo told the BBC. "The biggest increase in unemployment is being driven by Italy and Spain.

"It is the same as you are seeing in financial markets," he explained. "The periphery (Spain and Italy) is the area where the banks are the least capitalised and need the most help, and the loan rates are the highest."

Data earlier this month showed that the eurozone returned to recession in the three months to September, shrinking 0.1% during the quarter, following a 0.2% contraction the previous quarter.

The economies of Germany and France have also begun to weaken. The BBC reports etail sales in Germany shrank 2.8% in October. Consumer spending in France shrank 0.2%.