Unemployment in the eurozone soared to 11.1% in May, while the manufacturing collapse continued and is set to accelerate, according to official statistics produced yesterday.
A total of 17.56 million people are now officially out of work, marking the highest level since records began in 1995, according to EU statistics body Eurostat.
Meanwhile, the manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, remained at 45.1 in June, with any reading below 50 indicating contraction.
The data compounds the gloomy outlook for the eurozone where companies have reduced or frozen spending levels – including labour costs – as fears over the impact of the ongoing debt crisis have reduced confidence in future growth.
Joblessness in the eurozone has risen for the past 14 months.
In Spain, which has the highest unemployment rate in the 17-nation bloc, one in four people is now out of work.
The downturn in employment is reflected in the eurozone’s manufacturing sector.
The closely-watched manufacturing PMI’s unchanged reading of 45.1 in June means it remains at its lowest reading for three years.
The survey’s employment index fell to 46.7 in June, its lowest since January 2010, from 47.1 in the previous month, signalling accelerating job cuts.
‘The Eurozone Manufacturing PMI suggests that the goods-producing sector contracted by around 1% in the second quarter, with this steep rate of decline looking set to accelerate further as we move into the second half of the year,’ Chris Williamson, Chief Economist at Markit said.
‘Companies are clearly preparing for worse to come, cutting back on both staff numbers and stocks of raw materials at the fastest rates for two-and-a-half years.
‘Producers’ input costs are now falling at the fastest rate for nearly three years, which should help boost profitability and feed through to lower inflation.
‘However, their biggest fear at the moment is slumping demand rather than rising prices, with demand in home markets and further afield being hit by heightened uncertainty regarding the economic outlook as the region’s economic crisis rolls on.’
May’s eurozone unemployment rate compares badly with an unemployment rate of 8.2 per cent in the United States and 4.4 per cent in Japan, and is expected to rise further in the coming months as the eurozone economy is forecast to slide back into recession this year.
In total, 17.6 million people were out of work in the eurozone in May, up 88,000 on the month before and 1.8 million more than the level a year earlier.
‘The numbers . . . indicate ongoing labour market weakness, with further deterioration highly likely in the second half of the year,’ said Ashley James, senior European economist at RBC Capital Markets.