Eurozone Unemployment Set To Rise Further This Year: IHS Global Insight

Eurozone's unemployment, which hit a record high in April, is likely to increase further and reach significantly high levels by year-end, Capital Economics chief European and UK Economist Howard Archer said Monday.

IHS Global Insight noted that jobless rate in the single-currency bloc may rise to 11.5 percent by the end of this year with the region seemingly headed for renewed clear GDP contraction in the second quarter, and with business confidence weakening to a two-year low in May. Also, companies generally are under serious pressure to keep their labor forces tight to contain costs amid limited demand, strong competition, squeezed margins and uncertain growth outlooks, the firm noted.

According to Archer, April's sharp rise in unemployment adds to concerns that consumer spending is likely to remain generally muted in the near term at least, especially given the muted wage growth and tighter fiscal policy in many countries.

Latest data from Eurostat showed that the number of jobless persons across the Eurozone rose further by around 110,000 to 17.405 million in April, the highest level since the Eurozone was formed more than a decade ago. The latest was the 12th successive monthly rise in unemployment, but the rate of growth was the smallest since December. The unemployment rate, meanwhile, remained unchanged from the previous month at 11 percent.

Data showed that unemployment increased in most member countries in April. The increase was generally moderate in the core Northern Eurozone economies, while unemployment continued to move higher in the struggling southern periphery countries, including the troubled Greece.