(RTTNews) - Eurozone unemployment stood at a record high in June as firms were forced to cut jobs to reduce expenditure amid slowing demand ensuing from the sharp economic slowdown.
Despite economic weakness, inflation in the currency bloc remained above the European Central Bank's target in July. The rising unemployment and high inflation continued to squeeze consumer spending.
The jobless rate for June was 11.2 percent, unchanged from May, Eurostat reported Tuesday. The figure matched economists' expectations. The initially estimated rate for May was 11.1 percent.
There were 17.8 million unemployed in the euro area. Compared with May, the number of persons unemployed increased by 123,000. From the previous year, it increased by 2.024 million.
The jobless rate was stable in the EU27 also, at 10.4 percent. The lowest unemployment rates were registered in Austria, the Netherlands and Germany, while Spain and Greece topped the list.
According to today's flash estimate, Eurozone inflation held steady at 2.4 percent, above the central bank's target of "below, but close to 2 percent." The final data is due on August 16.
The still high rate of inflation need not prevent the ECB from taking further action to try to pull the region out of recession this week or after, said Jennifer McKeown at Capital Economics.
A deepening recession and growing spare capacity will pull down core inflation, raising hopes of the headline rate falling below 2 percent, the economist added.
Although inflation stays above the threshold limit, the ECB resorted to a rate reduction in early July. The main refinancing rate was reduced by 25 basis points to 0.75 percent. This first rate cut to below 1 percent was taken to support the euro area economy that is reeling under severe distress.
The International Monetary Fund expects the crisis-plagued Eurozone to shrink 0.3 percent this year. The 2013 growth forecast for the currency-bloc was cut to 0.7 percent from 0.9 percent.
