EU unemployment rate jumps to record high

The final figure of euro area manufacturing PMI for April showed a marginal downward revision. The headline figure was revised from 46.0 to 45.9 compared with a reading of 47.7 in March. National details show a downward adjustment in both the German (46.2 from 46.3) and French (46.9 from 47.3) reading. The main disappointment was however based in Italy, where the manufacturing PMI plunged from 47.9 to 43.8, but also in Spain (43.5 from 43.6) and Greece (40.7 from 41.3) the slump deepened in April. Only in Ireland (50.1 from 51.5) and Austria (51.2) the manufacturing PMI managed to stay out of contraction. The breakdown shows that demand from both domestic and external clients was weak in April. The deteriorating outlook was also reflected in the labour market where job losses were reported for a third consecutive month. Besides the headline figure, it is particularly worrying that the weakness is not only based in the peripheral countries, but in the core too, suggesting that the contraction in GDP might be somewhat stronger than had been expected until now.

In March, the euro zone unemployment rate extended its upward trend. The unemployment rate rose from 10.8% to 10.9%, in line with expectations and equalling the record high, reached in 1997. Eurostat estimates that the number of people unemployed rose by 169 000 in the euro area, compared with the previous month. In total, 17.365 million people are now unemployed in the euro area, 1.732 million more than one year ago. The lowest unemployment rates are registered in Austria (4.0%), the Netherlands (5.0%), Luxembourg (5.2%) and Germany (5.6%) and the highest in Spain (24.1%) and Greece (21.7%). It is almost certain now that the unemployment rate will jump to a new record high in the coming months. A separate German report showed that the number of people unemployed rose unexpectedly in April. German unemployment rose by 19 000 to a total level of 2.875 million, while the unemployment rate stayed unchanged at an upwardly revised 6.8%. The number of vacancies dropped by 1 000 after staying unchanged in March. For long, it seemed that the German economy would weather the crisis rather well, but now signs are increasing that also Germany will not escape a (mild) recession. The labour market data remain strong, but there are signs of a slowdown too.