Eurozone jobless rate at record highs
Unemployment in some parts of Europe is worse than during the Great Depression. Investors ignore the EU's financial woes at their own peril, say some analysts.
Yes, the economic landscape in the United States is still far from rosy. But if it's any consolation, consider the financially beleaguered eurozone -- the European Union countries that adopted the euro as their currency -- where unemployment hit a record high in March and where, in some countries, the jobless rate is worse than it was in the U.S. during the darkest years of the Great Depression.
Eurostat, the European Union's statistical office, reports the seasonally adjusted unemployment rate for the 17-nation eurozone was 12.1% in March, up from the previous high of 12% reached just a month earlier. Unemployment for the broader, 27-member European Union stood at 10.9% in March.
The office also reported eurozone inflation at 1.2% in April, down from 1.7% in March.
Among eurozone members, Austria, Germany and Luxembourg had the lowest jobless rates -- at 4.7%, 5.4% and 5.7%, respectively. At the other end of unemployment spectrum were Greece (27.2% in January), Spain (26.7% in March) and Portugal (17.5%).
By way of comparison, the U.S. unemployment rate in 1933, the Depression's low point, stood at 24.9% -- and that figure included workers ages 14 and older. And the nation's unemployment rate in March declined to 7.6% -- with April's jobless data due out on Friday.
Given eurozone inflation is at a three-year low and unemployment is at record highs, some analysts expect the European Central Bank may cut interest rates later this week.
"With inflation weaker than expected, unemployment rising yet again and signs of a longer recession, (a rate cut) would be a confidence boost," Sarah Hewin, a senior economist at Standard Chartered Bank, told Reuters.
ECB officials, however, continue their mantra that the worst of the European debt crisis has passed -- and that results from the region's painful austerity measures, labor reforms, fiscal consolidations and other regulatory attempts to stabilize the eurozone economy should kick in at some point.
"How soon growth will return will depend entirely on how soon Europe, especially the peripheral countries, are able to re-balance their economies," ECB governing council member George Provopoulos recently told Bloomberg. "And we have made good progress in that area, with Greece being a prime example."
So what does this mean for Wall Street and American investors? Commenting in a recent Seeking Alpha blog, Daniel Sckolnik, a senior analyst at Sabrient Systems, says the European recession should only deepen in the near future. And the Street, he notes, should be paying close attention in the meantime, "if it doesn't want to be caught off guard, as it seemed to be with the recent Cyprus banking debacle."
"There are simply too many crosscurrent events occurring at the moment to ignore from the eurozone," he adds, "the kinds of things that can suddenly coalesce into something akin to an economic rogue wave."
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