May: 10.0%

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

Previous: 10.0% Apr (10.1%), 10.0% Mar, 9.9% Feb, 9.9% Jan, 9.9% Dec

PARIS (MNI) – Much as expected, the Eurozone unemployment rate
stabilized in May, but at a slightly lower level than forecast, since
the uptick in April disappeared in revisions, according to seasonally
adjusted data released Friday by Eurostat.

Nevertheless, some 35,000 more people lost their jobs in May after
a loss 6,000 in April and gains of 55,000 in March and 81,000 in
February.

After including the most recent EU Labour Force Survey data in its
calculations and updating seasonal adjustments, Eurostat revised down by
more than 100,000 the jobless level in April and by a lesser amount for
earlier months.

At the end of May, close to 15.8 million people were unemployed in
the Eurozone, the agency estimated. This was nearly one million more
than a year earlier. For young people under 25, the jobless rate eased
to 19.9% in May from 20.0% in April and March.

Employment has suffered less from the crisis than initially feared
and recent data point to a turnaround in the labor market. Employment
increased marginally in 1Q for the first time in nearly two years after
the loss of nearly four million jobs from pre-crisis levels.

The PMI polls signaled further modest job gains both in industry
and the services in May and June. Hiring expectations in industry have
improved steadily in recent months and are now above the long-term
average, the European Commission’s surveys show. In other sectors,
however, employment prospects remain below average, especially in the
services and construction.

The expansion in economic activity is likely to remain too sluggish
in the months ahead to absorb new labor market participants, let alone
roll back unemployment levels. Moreover, as a result of public subsidies
for reduced working hours in some countries, many industry firms have
comfortable staff reserves that should allow them to cope with a
recovery in demand.

The Commission’s forecast in May had called for another 1% decline
in Eurozone employment this year and only a marginal recovery next year.
The jobless rate would continue climbing next year to an average of
10.4%.

“The relatively limited labor-market adjustment so far, together
with a sectoral reallocation forced by the crisis, suggests a rather
jobless recovery and (potentially persistent) high unemployment ahead,”
the Commission explained at the time.

The OECD is somewhat less pessimistic, projecting a peak in the
Eurozone jobless rate at 10.2% in the second half of this year — nearly
two points above the average for all developed economies — but no
decline before mid-2011.

These projections point to further downward pressure on wages,
which will keep inflation low and allow firms to protect profit margins,
but also compress real incomes and weigh on private consumption well
into next year at a time when austerity programs are throttling
activity.

Spain has seen its jobless rate rise two full points over the past
year to 19.9%, with a monthly increase of 0.2 point in May. For those
under 25, the rate stood at over 40%.

In France, jobless rate stabilized at 9.9% for the fifth month in a
row. However, the number of jobseekers registered by the national
unemployment agency has increased in four of the past five months, most
recently by 22,600 in May.

Italy also saw its jobless rate stabilize at 8.7%, the same level
as in March and April.

By contrast, Germany’s jobless rate eased another 0.1 point to
7.0%, for a 0.6-point decline on the year. National results for June
gave an unchanged rate, despite a further decline in the level by
21,000.

Elsewhere, the monthly changes were mixed. A decline of 0.1 point
was registered in Austria (4.0%) and of 0.2 point in Finland (8.6%) and
Malta (6.7%). Jobless rates were unchanged in the Netherlands (4.3%),
Slovenia (7.1%) and Slovakia (14.8%). They rose by 0.1 point in Belgium
(8.6%) and Portugal (10.9%), by 0.3 point in Cyprus (7.2%) and by 0.4
point in Ireland (13.3%).

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

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