European Unemployment Rise Puts Pressure on Central Bank

Pressure is mounting on the European Central Bank to boost activity in the euro area after the latest figures showed a fresh rise in unemployment and inflation dropping sharply to a four-year low.

The jobless total for the 17 nations that use the single currency rose by 60,000 in September to 19.4 million – the 29th consecutive monthly increase. Unemployment is a million higher than in September 2012 and up by almost four million since the spring of 2011.

At 12.2%, the jobless rate was the highest since monetary union began at the end of the 1990s, according to data from Eurostat, the EU’s statistical agency.

Analysts said the labour market in the euro area had yet to stabilise despite the return of modest growth in recent months. Jobless rates range from 4.9% in Austria and 5.2% in Germany to 26.6% in Spain and 27.6% in Greece, with unemployment in Italy rising to a record high of 12.5% in September. The jobless total in France also rose, up by 34,000 in September and by almost 250,000 in the past year.

Unemployment among the under-25s rose by 14,000 in September to 5,584,000 – leaving the youth jobless rate unchanged at 23.5%. In France, the youth jobless rate jumped from 25.6% to 26.1%, while in Italy it increased from 40.2% to 40.4%.

Meanwhile, separate figures from Eurostat showed the euro area’s inflation rate dropping from 1.1% to 0.7% – well below the ECB’s target of keeping it just under 2%.

In contrast to Britain, where dearer gas and electricity bills are pushing up the cost of living, cheaper energy was a big factor in reducing inflation across the euro area. UK inflation, at 2.7%, is now two percentage points higher than in the single currency zone.


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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza