January preliminary: 10.7%

MNI survey median: 10.4% MNI survey range: 10.4% to 10.5%

Previous: Dec 10.6% (10.4%), 10.5% Nov (10.4%), 10.4% Oct (10.3%)

FRANKFURT (MNI) – The Eurozone unemployment rate surged in January
to reach a new record high of 10.7% as the monthly increase in the
number of jobless accelerated sharply and previous rates were revised
upwards, according to seasonally adjusted data released Thursday by
Eurostat.

January’s unemployment rate exceeded all expectations in an MNI
survey of analysts. The most pessimistic had projected only a rate of
10.5%

The number of unemployed rose by 185,000 to 16.925 million. In
December the increase had temporarily slowed to 96,000 compared to an
average monthly increase of around 156,000 over the previous five
months.

For several countries, including France, more complete data from
the 4Q labor force survey, which could lead to later revisions, were not
yet available for today’s report.

From its previous peak in May 2010, unemployment in the Eurozone
had declined by only 435,000 before it began rising again a year later.

The jobless tide is likely to swell faster in the months ahead as
activity slumps, thereby dampening consumption and accentuating the
cyclical downturn. February’s preliminary Eurozone PMI surveys showed
that the employment index dropped to 49.0 from 50.1, signalling further
job reductions.

Employment expectations as measured by the European Commission also
dropped again in February in the key services (2.4 vs 3.4) and
manufacturing sectors (-3.6 vs -3.4). While hiring expectation in
retailing and construction inched higher, they remain well below their
historical averages.

The OECD expects Eurozone employment to contract by 0.3% this year,
more than retracing last year’s upturn, before recovering by 0.2% in
2013. The jobless rate would jump from an average of 9.9% in 2011 to
10.3% this year, and then stabilize next year.

Germany is likely to remain one of the few sources of Eurozone job
growth in the months ahead. Unemployment rose only slightly to 5.8% from
5.7%, according to Eurostat. Despite the economic slowdown, the ranks of
the unemployed in Germany in February held firm at 2.866 million in
February and the unemployment rate (national definition) again printed
at 6.8% in February.

Yet even Germany’s labor market will lose some steam next year as
economic growth slows, a study by the national Labor Agency suggests.
After a drop of 270,000 last year, unemployment should fall by an
average of only 50,000 this year, assuming GDP growth of 1.0%. Most of
that decline would come from the statistical carryover of last year’s
reduction.

In France, the unemployment rate rose 0.1 point on the month to
10.0%, according to Eurostat. National data showed that the number of
registered jobseekers seeking full-time work rose by 13,400 to 2.862
million, marking the highest level in more than 12 years.

Insee, the French national statistics institute, expects another
61,000 jobs to be lost in the first half of this year. Industry would
account for over a third of the layoffs, the services nearly two thirds,
and construction the rest. The domestic jobless rate would rise to 9.6%
by June from 9.4% in 4Q.

In Spain, where the meltdown in employment has been the most
dramatic, the jobless rate was rose to 23.3 January from 23.1% in the
previous month — by far the highest in the Eurozone. Italy’s jobless
rate rose 0.3 point in January to 9.2%.

Among the other reporting Eurozone countries unemployment rose to
14.8% from 14.7% in Ireland and to 14.8% from 14.6% in Portugal. In
Slovakia the rate eased to 13.3% from 13.4% and in Belgium it rose to
7.4% from 7.3%.

–Frankfurt newsroom +49 69 72 01 42; e-mail: frankfurt@marketnews.com

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