Unemployment Rises to a New High in Euro Zone
By
MELISSA EDDY and
DAVID JOLLY// Published: January 8, 2013/ NYT
BERLIN — Unemployment in the euro zone rose to a new high in November,
according to data released Tuesday that also showed that the troubles in
the 17-nation currency bloc were straining its strongest member, Germany.
The euro zone jobless rate rose to 11.8 percent in November from 11.7
percent in October, according to Eurostat, the statistical agency of the
European Union.
Eurostat estimated that 18.8 million people in the euro zone were
unemployed in November, two million more than a year earlier.
Germany has provided momentum to the European economy over the past
three years, as strong exports protected the country from the crisis.
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But on Tuesday, the Federal Statistics Office in Berlin said that German
exports declined 3.4 percent while imports slid 3.7 percent in November
from a month earlier. The weakness narrowed Germany’s trade surplus to
€14.6 billion, or $19 billion.
German factory orders also fell in November amid weak demand from
outside the euro area, the Economy Ministry said Tuesday. Orders,
adjusted for seasonal swings and inflation, slid 1.8 percent from
October, when they jumped 3.8 percent.
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“The November numbers are not a one-off but an extension of the current
trend of weakening exports,” Carsten Brzeski, an economist at ING, wrote
in a research note Tuesday. He pointed out that German exports had
fallen about 4 percent since May.
“Today’s data confirmed our view that exports should have turned from driver of growth into drag on growth,” he wrote.
A separate report from Eurostat showed that retail sales fell 2.6
percent in November from a year earlier, though they gained 0.1 percent
from October.
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The gloomy reports come as the Governing Council of the European Central Bank prepares to hold a policy meeting Thursday, followed by an interest-rate announcement. Despite a sharp decline in bank lending reported
last week, which had some analysts suggesting that the central bank
might try new steps to stimulate the economy, economists surveyed by
Reuters said they expected the E.C.B. to leave policy unchanged in
January as it waited for a clearer picture of economic conditions.
Like their counterparts in the United States, Japan and Britain, the
monetary authorities in the euro zone have already opened the spigots,
allowing banks to borrow essentially as much as they want at the
benchmark rate. Mario Draghi,
president of the E.C.B., has pledged to do whatever is necessary to
ensure the stability of the euro, including, if needed, buying the
sovereign bonds of Spain and Italy to hold their borrowing costs to
sustainable levels.
The president of the European Commission, José Manuel Barroso, said
Monday in Lisbon that “the existential threat against the euro has
essentially been overcome. ”
“In 2013 the question won’t be if the euro will, or will not, implode,” he said.
The central bank’s actions have succeeded in calming markets and driving
down government bond yields for embattled countries. The European
Commission reported Tuesday that an index of economic sentiment in the
euro zone had improved by 1.3 points in December, to 87. “Economic
sentiment in the euro area improved among consumers and across all
sectors, except retail trade,” the commission reported.
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Gilles Moëc, an economist at Deutsche Bank in London, said the data
Tuesday were consistent with expectations that the euro zone economy
would remain in recession through the winter, with the unemployment rate
possibly rising to as high as 12.4 percent.
“We’re still far below the level of growth that would stabilize the labor market,” he said.
But he added that the commission’s report on economic sentiments, as
well as recent surveys of purchasing managers, suggested that the
downturn in the manufacturing sector had “bottomed out,” making possible
a return to growth later in the year.
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“External demand seems to be holding up better than we had thought,” Mr.
Moëc said. “Now we are to a large extent dependent on what happens in
the United States,” he added, referring to the negotiations on spending.
Europe also got a vote of confidence from Tokyo on Tuesday, as Finance
Minister Taro Aso said Japan would buy bonds of the European Stability
Mechanism, the euro zone bailout fund, as well as sovereign debt in the
currency zone.
“The financial stability of Europe will help the stability of foreign
exchange rates, including the yen,” Mr. Aso was quoted by the Nikkei
newspaper as saying.
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Attacking joblessness may require governments to ease back on austerity measures that many economists, including some at the International Monetary Fund, say might have gone too far. In France, President François Hollande has vowed to turn around the flagging labor market, where, according to Eurostat, unemployment was 10.5 percent in November.
Eurostat said Spain, which is suffering from the collapse of a real
estate bubble and the impact of a raft of tough austerity measures, had
the highest unemployment rate in the bloc, at 26.6 percent. Greece,
where the sovereign debt crisis
began, was next at 26 percent, according to data released in September.
The lowest rates were in Austria, at 4.5 percent; Luxembourg, at 5.1
percent; and Germany, at 5.4 percent.
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Worryingly, youth unemployment in the euro zone continued to grow, with
5.8 million people under age 25 classified as jobless in November, up
420,000 from a year earlier.
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GREECE
The Greek prime minister, Antonis Samaras, who was in Berlin for talks with Chancellor Angela Merkel
on Tuesday, singled out youth unemployment as one of the biggest
challenges Greece faces in reviving its economy. But he said at a news
conference before meeting the chancellor that, over all, he was
positive.
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“I see the glass half-full,” Mr. Samaras said before taking part in an
economic conference in Berlin. “We’re delivering and Europe’s helping.”
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It was the Greek prime minister’s second trip to Berlin since taking
office. The mood appeared lighter than during his visit in August, which
came on the heels of calls from within Ms. Merkel’s government for
Greece to leave the common currency.
Greece is focusing its efforts on winning back the trust of Europeans,
as well as the markets, Mr. Samaras said. But he emphasized that high
unemployment, especially among young people, weighed heavily on Greeks.
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“I would like to make it clear up front that our country is making
enormous efforts and many are paying a high price, in order to get
things back on track,” Mr. Samaras said.
Ms. Merkel said that Greece’s European partners must continue to support
the country.
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She was perhaps wary of the fragility of Mr. Samaras’s
three-party coalition government, which has been pushing through deeply
unpopular reforms.
“We also must do everything to guarantee economic growth, security and jobs,” Ms. Merkel said.
David Jolly reported from Paris. James Kanter contributed reporting from Brussels and Hiroko Tabuchi from Tokyo.
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