The 16-country euro zone lost a record 1.22 million jobs in the first quarter of 2009, data showed today, highlighting the depth of recession and boding ill for any quick turnaround.
The number of employed fell 0.8 per cent in the first three months against the previous quarter to 146.2 million, pulled down by job losses in Greece and Spain, the European Union statistics office, Eurostat, said.
Employment during the first quarter fell 1.2 per cent year-on-year, also the deepest annual drop since measurements started in 1995.
“Extended and deep economic contraction, depressed business confidence and deteriorating profitability increasingly fed through to reduce jobs across the euro zone in the first quarter," said Howard Archer, economist at consultancy IHS Global Insight.
Eurostat also revised down its quarterly employment figure for the last three months of 2008 to a drop of 0.4 per cent from the previously reported 0.3 per cent decline.
Recession-hit factories are closing and laying off workers, despite hundreds of billions of euros in government funds spent on stimulating the economy.
Weak job figures, coupled with the prospect of negative inflation, are likely to convince the European Central Bank (ECB) to keep its main interest rate at a record low 1 per cent for an extended period, or even cut it, economists say.
“Markedly weakening labour markets are a major threat to recovery prospects in the euro zone,” Mr Archer said.
The euro zone's economic output shrank by a record 2.5 per cent in the first quarter compared with the previous three months, although many economists believe falls in subsequent quarters will not be as deep.
The employment figures underscore weakness in consumer demand, key to lifting Europe from its worst recession since World War Two.
The steepest quarterly falls in employment were recorded in Spain, on 3.1 per cent, Slovakia at 1.9 per cent and Greece with 1.8 per cent. In Germany, the euro zone's biggest economy, employment decreased by 0.3 per cent.
Earlier in June, Eurostat said euro zone unemployment jumped to 9.2 per cent in April, its highest level in nearly 10 years.
By comparison, the unemployment rate was 9.4 per cent in May in the United States and 5 per cent in April in Japan.
Reuters