Debt-laden Europe logged record unemployment on Tuesday and its core currency and shares plummeted amid a worrying industrial slowdown.
The unemployment rate hit 10.1 percent in April, its highest since the euro came into being in 1999 in just one of a series of blows on Tuesday to the eurozone economy after a brief lull last week in market pressure.
Almost 16 million people were out of work across the 16 countries that share the euro, the European Union said.
The numbers reached more than 23 million in the 27-nation EU as a whole, including non-euro giants Britain and Poland, 2.4 million more than one year earlier.
The euro sank to a new four-year low of US$1.2115 on concerns about the European financial sector’s ability to weather the region’s debt and deficit crisis.
“We have no doubts on the future of the euro. The euro is one of the most stable currencies in the world,” European Commission chief Jose Manuel Barroso told reporters during an EU-Russia summit.
European stocks fall
However, European stock markets also fell sharply, as market reports said the European Central Bank had warned that eurozone banks could face new asset write-downs.
Meanwhile, fresh data from purchasing managers further showed that private sector manufacturing output growth slowed in May to a level not seen since the collapse of Lehman Brothers in late 2008.
Leading economy Germany recorded a “significant slowdown” in its growth rate, with the overall trend reflecting “the speed with which uncertainty surrounding the sovereign debt crisis appears to have hit business activity,” according to Markit research (sic) boss Chris Williamson.
Analysts noted that the number of new jobless in the eurozone, at 25,000 in May, was the smallest monthly rise since last November, and well down from the previous month.
However, “the rise in the number of eurozone jobless spiked up to 287,000 in the first quarter of 2010 from 137,000 in the fourth quarter of 2009,” London-based IHS Global Insight economist Howard Archer underlined.
“Despite April’s much reduced rise in unemployment, we remain doubtful that the eurozone labour market is on the brink of turning around,” he stressed.
The latest figures show US unemployment running at 9.9 percent, and Japan’s at just 5.0 percent.
Varying unenmployment across Eurozone
Throughout the EU, only Germany recorded a fall in unemployment over the full year, from 7.6 percent to 7.1 percent.
Deficit-plagued Spain, with a 19.7 percent rate beaten only by Latvia, saw unemployment among under-25s reach a dizzying 40.3 percent in the first quarter of 2010.
The threat of nasty tailwinds from the world’s deepest post-war recession lurks behind a sharp slowdown in growth.
“All countries saw a deterioration in growth of output and new orders,” said London-based Markit of the manufacturing brakes, particularly painful in recessionary Greece.
“The extent to which manufacturing growth slowed in May has been exceeded only once in the survey’s 13-year history, in the aftermath of Lehman’s collapse,” they said referring to the September 2008 bankruptcy of Wall Street giant Lehman Brothers.
There was some good news in the data, relating to the currency fall.
Export growth was “running at a near 10-year peak,” said Williamson, and his figures actually indicated a rise in manufacturing employment for the first time in two years.
“The sharp depreciation of the euro will also sustain activity, particularly in Germany and in Italy which export more outside the zone than inside,” stressed BNP Paribas analyst Clemente De Lucia.
However, Paris-based De Lucia also warned that serious belt-tightening in most European countries – fearful of a battering the way Greece was brought to its knees – as well as tumbling stock values and weakening consumer confidence data over recent months “are likely to drag down private consumption.”