Eurozone joblessness jumps to 8.5 percent

Bloomberg

The jobless rate in the euro zone rose to 8.5 percent from a revised 8.3 percent in January, the European Union’s statistics office in Luxembourg said yesterday. The February reading is the highest since May 2006 and exceeded the 8.3 percent rate economists forecast, according to the median of 23 estimates in a Bloomberg News survey. The January figure was revised higher from 8.2 percent reported on Feb. 27.

Employers throughout the region are reducing production and postponing investments as the global slump cuts demand, forcing them to fire workers. The Organization for Economic Cooperation and Development on Tuesday said the combined economy of its 30 member nations will contract 4.3 percent this year, the most in more than 50 years.

"Eurozone unemployment is still rising at an alarming pace," said Jennifer McKeown, an economist at Capital Economics in London. "The downturn in the labor market is already the most severe in the region’s history," she said, adding that "there is a further downturn to come."

Leaders from the Group of 20 emerging and developed nations will meet in London today to try to forge a common response to the crisis. U.S. calls for European nations to spend more on fiscal stimulus have met with some resistance by government’s trying to keep their budget deficits under control.

Europe’s manufacturing industry contracted more than estimated in March as the deepening economic slump eroded export demand and investor confidence, a survey of purchasing managers by Markit Economics showed yesterday. Unemployment in Germany, Europe’s largest economy, rose more than economists forecast in March as foreign and domestic demand weakened, the government said Tuesday.Heidelberger Druckmaschinen, the world’s largest maker of printing presses, plans to fire 5,000 workers, about a quarter of the workforce, as it lowers costs to counter slumping orders, the company said last week. Royal KPN, the biggest Dutch phone company, plans to cut about 10 percent of jobs at its Getronics computer-services unit as demand weakens.