THE Eurozone’s unemployment rate hit double digits in February and is expected to continue rising beyond its 11-and-a-half year high of 10 per cent in the coming months.
The number of jobless in the 16-country area rose by 61,000 in February, taking the total number of unemployed across the region to 15.749m.
The pace of increase has slowed since the Eurozone returned to growth in the third quarter of last year, but the rise in unemployment has been limited by government jobs and support schemes, particularly in Germany. Europe’s largest economy saw a 31,000 fall in the seasonally-adjusted number of unemployed, taking the jobless rate to eight per cent from 8.2 per cent.
But while unemployment has risen, so too has inflation. March figures published yesterday revealed that inflation spiked to a 15-month high of 1.5 per cent, well above consensus expectations of 1.1 per cent.
As this was a flash estimate, the breakdown will only be published by Eurostat on 16 April.
Societe Generale’s Klaus Baader reckoned that the main drivers of this surge in prices were food and energy prices. “The latter would reflect a strong increase in crude oil prices in world markets, while the former was a function of the unusually harsh winter and severe rain in southern Europe in February/March,” he said.
But Baader added that the disinflationary forces in the economy remain formidable and believes the March spike was a one-off move. He only expect smodest downward moves in the headline rate.
Inflation in 2011 is likely to be lower than in 2010, and in all probability less than one per cent.