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    Wednesday, May 01, 2024

    Unemployment hits record high in eurozone

    Juan, a 50-year-old from Spain, begs for money in Madrid Friday with a banner reading "I am a father of a family. I do not have a job or money to support them. Tomorrow someone else might be asking for money and it could be you."

    London - Unemployment in the eurozone continued its relentless march higher in April, according to official data published Friday, hitting yet another record amid a prolonged recession and the lack of a coordinated response by policymakers.

    The jobless rate for the 17 countries that use the common currency rose to 12.2 percent, from 12.1 percent a month earlier, with 19.4 million people out of work, according to Eurostat, the EU statistics agency. Nearly a quarter of job-seekers under age 25 were unemployed. Some analysts said the jobless rate could hit 20 million by the end of the year.

    Despite the rise, most analysts do not expect the European Central Bank to cut interest rates or take other action to stimulate growth when its policymaking council meets in the coming week. Separate data from Eurostat showed that inflation in the eurozone rose to 1.4 percent from 1.2 percent, which could prompt the ECB to wait for clearer signs that there is no risk of higher prices.

    Analysts said the continued rise in youth unemployment was particularly alarming. It reached 62.5 percent in Greece and 56.4 percent in Spain in April, Eurostat said, threatening to become a long-term drag on growth as young people are unable to start their careers.

    "Youth joblessness at these levels risks permanently entrenched unemployment, lowering the rate of sustainable growth in the future," Tom Rogers, an economist who advises the consulting firm Ernst & Young, said in an email message.

    A decision by EU leaders to allow distressed countries more time to cut their government budgets will help, he said, as would a cut in the benchmark interest rate by the ECB last month.

    For the moment, though, there is little prospect of major additional stimulus from governments or the ECB. The central bank remains reluctant to undertake more radical measures like those used by the U.S. Federal Reserve or the Bank of England. The ECB benchmark interest rate is already at a record low of 0.5 percent, and it is unlikely that a further cut would do much to relieve a credit crunch in countries like Italy.

    The ECB aims for inflation of about 2 percent, and still has room for additional measures without violating its mandate to maintain price stability. But the uptick in inflation reported Friday, caused primarily by a rise in prices for food, alcohol and tobacco, could quiet those who have argued that the eurozone is in danger of sinking into deflation.

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