By Marcus Leach
Official statistics released today (Monday) have painted a grim picture for the Eurozone, with unemployment up and output in manufacturing down.
May's data, from EU statistics body Eurostat, shows that unemployment is at 11.1%, the highest level since records began in 1995. With a total of 17.56m people now out of work the gloomy outlook in Europe looks set to continue for some time.
A further blow is the manufacturing Purchasing Managers' Index (PMI), compiled by Markit, which is 45.1, and any reading below 50 indicates contraction.
“The Eurozone Manufacturing PMI suggests that the goods-producing sector contracted by around 1% in the second quarter, with this steep rate of decline looking set to accelerate further as we move into the second half of the year," Chris Williamson, Chief Economist at Markit said.
"Companies are clearly preparing for worse to come, cutting back on both staff numbers and stocks of raw materials at the fastest rates for two-and-a-half years.
“Producers’ input costs are now falling at the fastest rate for nearly three years, which should help boost profitability and feed through to lower inflation. However, their biggest fear at the moment is slumping demand rather than rising prices, with demand in home markets and further afield being hit by heightened uncertainty regarding the economic outlook as the region’s economic crisis rolls on.”
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The data compounds the gloomy outlook for the eurozone where companies have reduced or frozen spending levels - including labour costs - as fears over the impact of the ongoing debt crisis have reduced confidence in future growth.
Joblessness in the eurozone has risen for the past 14 months.
In Spain, which has the highest unemployment rate in the 17-bloc nation, one in four people is now out of work.
The downturn in employment is reflected in the eurozone's manufacturing sector. The closely-watched manufacturing PMI's unchanged reading of 45.1 in June means it remains at its lowest reading for three years.
The survey's employment index fell to 46.7 in June, its lowest since January 2010, from 47.1 in the previous month, signalling accelerating job cuts.
"Companies are clearly preparing for worse to come, cutting back on both staff numbers and stocks of raw materials at the fastest rates for two-and-a-half years," said Chris Williamson, chief economist at data provider Markit.