Employment drops further in eurozone

Bloomberg

Employment in the 16-member euro region dropped 0.8 percent from the fourth quarter, when it fell 0.4 percent, the European Union statistics office in Luxembourg said Monday. The first-quarter drop was the biggest decline since the data series started in 1995. From a year earlier, payrolls contracted 1.2 percent, the first annual drop on record.

The euro-area economy may struggle to gather strength after shrinking at the fastest pace in at least 15 years in the first quarter as companies reduced output and spending to survive the economic crisis. Continental, Europe’s second-largest car-parts maker, said this month that it may fire as many as 2,600 workers in Germany. Still, European Central Bank President Jean-Claude Trichet said on June 4 that the region’s economy may be past the worst and return to growth by mid-2010.

"Companies will continue to cut jobs well into 2010, pushing up unemployment across the region," said Stefan Bielmeier, an economist at Deutsche Bank in Frankfurt. "While the economy may start to stabilize, the worst is still ahead in terms of the labor market."

The euro-area economy will probably shrink around 4.6 percent this year and about 0.3 percent in 2010, the ECB forecast this month. The European Commission expects unemployment to average 9.9 percent this year and 11.5 percent in 2010, with the biggest increases in Ireland and Spain. Europe’s jobless rate is currently 9.2 percent, the highest in almost a decade.

The fourth-quarter drop in euro-area employment from the prior quarter was revised to 0.4 percent from 0.3 percent estimated earlier.