February: 10.0%

MNI survey median: 10.0%
MNI survey range: 9.9% to 10.0%

Previous: 9.9% Jan, 9.9% Dec, 9.9% Nov, Oct 9.8%, 9.8% Sep

FRANKFURT (MNI) – The Eurozone jobless rate rose as expected in
February to 10%, from January’s 9.9%, reaching the highest level since
August 1998, according to seasonally adjusted data released Wednesday by

The monthly increase in the number of unemployed slowed to 61,000
from 105,000 in January. In December the number had risen by 47,000. The
total number of unemployed in February was 15.749 million, some 1.844
million more than a year earlier.

Looking ahead, unemployment should rise further as companies
continue to adjust their work forces to the collapse in output. Recent
indicators, however, suggest that the pace of layoffs should slow in the
months ahead.

Propped up by government support schemes during the crisis,
employment has dropped by only half as much as economic activity,
leading to a severe slump in productivity. Given the subdued growth
prospects, companies will have to adopt to the new reality sooner or

The head of the German Labor Agency, Frank-Juergen Weise, warned
last week that “we are, maybe this year, at the point” where companies
will no longer be able to use government schemes of short-time work to
avoid layoffs to the same extent as previously.

Still, the economic recovery has brightened the outlook for the
labor market and the rise in unemployment appears set to decelerate.
March’s flash PMI polls pointed to slower job losses in both
manufacturing (48.2 after 47.1 in February) and services (48.9 after
48.3), boosting the composite employment component to 48.7 from 47.9.

The European Commission’s survey also offered some encouraging
signals. The employment expectations balances of all business sectors —
industry, services, retail and construction — showed improvement in
March. However, levels remained notably below their long-term norms.

According to Eurostat, the February unemployment rate remained
stable in a number of large Eurozone economies, including Germany.

In Germany the rate was unchanged at 7.5%, the report showed.
National data for Germany in March, released earlier today, once again
showed labor market developments surprising on the upside, signalling a
deceleration of the rise in joblessness.

The Germany Labor Agency’s research arm IAB projected a rise of
120,000 in the number of unemployed in 2010. A turnaround is not
expected before late 2011 or 2012, Weise said. German companies will
start making net new hires “at the earliest in 2011, but more likely in
2012″ as companies first unwind some of the measures taken to combat the
crisis once the economy rebounds.

In France, on the other hand, the unemployment rate resumed its
upward trend after remaining stable for three straight month. In
February, the French unemployment rate stood at 10.1%, the report

Leading indicators of Insee, the national statistics institute,
suggest that unemployment will continue mounting over the coming months
but at a gradually slower pace. Pole Emploi, the national employment
service, forecast, a significant improvement this year compared to 2009.
It is projecting an increase in unemployment of only 135,000 in 2010,
compared with a rise of 593,000 in 2009. In 2011, the trend should be
reversed with the economy generating 74,000 new jobs.

Among the other reporting Eurozone countries, the jobless rate
remained stable in Ireland (13.2%), Italy (8.5%) and Luxembourg (5.5%).
It rose in Spain (19.0% after 18.9%), Malta (7.1% after 7.0%),
Netherlands (4.0% after 3.9%).

Compared with a year ago, all member states recorded an increase in
their unemployment rates. The smallest increases were observed in
Luxembourg (5.4% to 5.5%), Germany (7.3% to 7.5%), and Belgium (7.7% to

–Frankfurt bureau: +49-69-720 142, email: frankfurt@marketnews.com

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