Eurozone unemployment record 11% in May 2012, manufacturing contracted for 10th straight month

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"The European Commission said on May 11 that the euro-zone economy may shrink 0.3 percent this year.

6/1/12, "Euro-Area Unemployment Reaches Record 11%, Led by Spain," Bloomberg, S. Meier

"Euro-area unemployment reached the highest on record as a deepening economic slump and budget cuts prompted companies from Spain to Italy to reduce their workforces.

The jobless rate in the 17-nation euro zone was at 11 percent in April and March, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995. The March figure was revised higher to 11 percent from 10.9 percent estimated earlier.

Europe’s companies are under pressure to lower costs to protect earnings as the worsening fiscal crisis erodes exports and consumer spending. Euro-area economic confidence dropped more than economists forecast last month and manufacturing output contracted. Deutsche Lufthansa AG (LHA) said on May 30 that it may cut as many as 1,000 jobs at LSG Sky Chefs, the world’s largest inflight caterer, in a bid to lower costs through 2014.

“The labor-market recession in the euro zone continues to spread and deepen,” said Martin van Vliet, an economist at ING Bank in Amsterdam. “We currently see the jobless rate peaking at or slightly above 11.5 percent, under the assumption that the euro-zone economy starts to emerge from its double-dip recession later this year.” ...

Spain, whose government is struggling to contain a banking crisis, had the bloc’s highest unemployment rate at 24.3 percent, up from 24.1 percent in March, today’s report showed. In France, the jobless rate rose to 10.2 percent from 10.1 percent, while Italy reported the same increase. Portugal’s rate reached 15.2 percent, up from 15.1 percent.

Adding to signs of a deepening slump, European economic confidence dropped more than economists forecast in May and manufacturing output contracted for a 10th straight month. In Germany, business sentiment fell more than economists had forecast in May,

• posting the steepest decline since August....

The situation is “deteriorating at an alarming rate,” said Chris Williamson, chief economist at Markit Economics in London. “Euro-zone manufacturers reported a deepening downturn in May, indicating that the damage to the real economy caused by the region’s financial and political crises continues to spread across the region.”

The European Commission said on May 11 that the euro-zone economy may shrink 0.3 percent this year, with countries from the Netherlands to Italy and Greece in recession. The European Central Bank, which will publish its latest projections when council members meet on June 6, currently forecasts a contraction of 0.1 percent in the euro area."...

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