The New York Times
The unemployment rate in the euro zone edged up in January to a new record, official data showed Friday, as the ailing European economy continued to weigh on the job market.
That, and new data showing a decline in inflation in the euro zone, could prompt the European Central Bank to take steps to stimulate the economy when its Governing Council meets this week, analysts said.
Unemployment in the 17-nation euro zone climbed to 11.9 percent in January from 11.8 percent the previous month, according to Eurostat, the statistical office of the European Union.
For the 27 nations of the Union, the jobless rate in January stood at 10.8 percent, up from 10.7 percent in December. All of the figures were seasonally adjusted.
A separate Eurostat report showed price pressures easing in February. In the euro zone, the annual inflation rate came in at 1.8 percent, down from 2 percent in January and below the European Central Bank’s 2 percent target.
The jobless data “suggest that wage growth is set to weaken from already low rates” and further depress consumer spending, which has already been damped by government austerity measures, Jennifer McKeown, an economist at Capital Economics in London, wrote in a research note.
Ms. McKeown noted that the low inflation numbers and high joblessness “should leave the E.C.B.’s policy options open,” and said it was possible the central bank “might discuss an interest rate cut or other unconventional policies” when its Governing Council meets on Thursday.
There was some bright news Friday. A survey of European purchasing managers by Markit, a data and research firm, showed German manufacturing output growing in February for a second straight month, as new business levels improved.
The composite German purchasing managers’ index improved to 50.3 in February — just above 50, the level that separates growth from contraction — from 49.8 in January. And the Federal Statistical Office in Wiesbaden reported Friday that German retail sales rose 3.1 percent in January from December, when sales fell 2.1 percent.
Another bit of data this week also supports the view that the German economy will bounce back after a fourth-quarter slump. The European Commission’s economic sentiment indicator for the euro zone rose to 91.1 in February from 89.5 in January, with German confidence leading the gain.
“German industry is clearly rebounding and taking advantage from better external traction,” Gilles Moëc, an economist at Deutsche Bank in London, wrote.
Employment is sometimes seen as a lagging indicator of economic growth, because companies try to avoid adding to their costs until they are convinced that a rebound is at hand.
But despite the glimmers of hope in German industry, there are few reasons to regard a recovery as imminent. Markit’s overall euro zone purchasing managers’ index was unchanged in February at 47.9, signaling continued contraction.
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Editor's Note: An Progressives -- including our President -- believe the European model is superior to the American Capitalist system...Not very bright, are they?...
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