October preliminary: 10.1%

MNI survey median: 10.1%
MNI survey range: 10.0% to 10.1%

Previous: 10.0% Sep (10.1%), 10.0% Aug, 10.0% Jul, 10.0% Jun, 10.0% May

PARIS (MNI) – The Eurozone unemployment rate edged up to a new
cyclical high of 10.1% in October, reflecting mainly a further strong
rise in Italy, according to seasonally adjusted data released Tuesday by
Eurostat.

Analysts had expected little change on the month from the previous
estimate of 10.1% for September, which was revised down by 0.1 point.

After an upturn in unemployment of 42,000 in September, some 80,000
more people lost work in October, boosting the jobless level to nearly
16 million — over 400,000 more than a year earlier. For young people
under 25, the jobless rate stabilized at 20.1%.

The Eurozone labor market as a whole has suffered less from the
crisis than initially feared, and recent data point to a timid
turnaround ahead. Employment declined by just 14,000 in 2Q after the
loss of nearly four million jobs from pre-crisis levels.

“However, despite brightening since the spring, the outlook remains
for a rather jobless recovery and (potentially persistent) high
unemployment ahead at the aggregate level,” the European Commission
cautioned Monday, citing the usual lag in the labor market response to a
cyclical upturn and the unwinding of job protection policies in some
countries.

After a 2.0% downturn in employment last year and a further 0.7%
decline expected this year, job creation should recover by 0.3% in 2011
and 0.4% in 2012, the Commission forecast in its autumn economic
outlook. This would trim the jobless rate to 10.0% on average next year
and to 9.6% in 2012. The crisis will leave structural unemployment at a
higher level, thereby dampening potential growth, it predicted.

In the shorter term, the flash PMI polls signaled a pick-up in
hiring in November, with the composite employment index rising to a
33-month high of 53.0. Job creation in industry was only slightly slower
than in the services.

Outside of construction and the financial services, employment
prospects improved in all sectors in November, standing close to
long-term averages in the services and retailing and well above in
industry, the Commission’s monthly survey showed.

Across the Eurozone, the Commission expects “a continuation of the
divergence observed to date in labor market performance” resulting from
the past structural reforms, the ongoing real estate meltdown in
countries like Spain and Ireland, the extent of downsizing in the public
sector and the sectoral sources of future expansion.

Italy’s jobless rate jumped 0.3 point in October to 8.6% after a
comparable upturn in September. Hiring expectations improved in November
in retailing and especially industry, but eroded somewhat in the
services and construction, according to surveys by the ISAE research
institute and the Commission.

Spain, which accounts for the lion’s share of Eurozone job losses
since the start of the crisis, saw its unemployment rate rise by 1.7
points in the 12 months to September. The rate was unchanged in October
for the first time in months. For those under 25, however, the jobless
rate mounted another half point to 43.2%.

While some easing is likely in the months ahead, Spain’s
unemployment rate is likely to remain ten points above the OECD average
in 2011, the OECD predicted in its latest Employment Outlook. Indeed, an
analysis of labor market flows suggests that jobless prospects are
“grimmer” here than elsewhere, the Commission commented.

In France, the jobless rate dipped 0.1 point to 9.8%. National
labor agency data showed a 0.8% downturn in registered jobseekers in
October, the steepest in 33 months but barely enough to retrace the rise
over the previous two months.

Surveys by the French national statistics institute Insee this
month point to modest employment gains in the services and wholesaling
in the near term, little change in retailing and a slower decline in
construction. Last month’s manufacturing survey signaled little change
in payrolls in 4Q.

Labor market prospects are brightest in Germany, where the jobless
rate stabilized in October at 6.7% after a 0.9-point decline over the
previous 12 months. National results for November showed a monthly
decline of 9,000 unemployed, but not enough to trim the jobless rate
further.

Still, the Ifo institute’s October employment barometer showed a
rise in the share of German manufacturing, construction and retailing
firms intending to add staff to the highest level in over a decade. “The
strong growth outlook for 2011 and 2012 will translate into further
falls in unemployment” approaching a rate of 6% towards 2012, the
Commission forecast.

The Netherlands’ jobless rate was stable as well in October at
4.4%, the lowest in the Eurozone, and only 0.3 point higher than a year
earlier.

Unemployment rates were also unchanged on the month in Belgium
(8.5%), Ireland (14.1%), Slovakia (14.7%) and Malta (6.2%). They dipped
by 0.1 point in Portugal (11.0%) and Finland (8.0%) and rose by 0.2
point in Slovenia (7.6%) and Cyprus (7.3%) and by 0.3 point in Austria
(4.8%).

–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com

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