European unemployment remains at 12-year high in May (Roundup)

By Andrew McCathie Jul 2, 2010, 12:20 GMT

Berlin - European unemployment remained at a twelve-year high of 10 per cent in May, data released Friday showed, as concerns grow about the world economic outlook.

Despite the unemployment rate holding steady, the jobless queues in the 16-member eurozone edged up 35,000 to 15.789 million, the European Union's statistics office Eurostat said on releasing the data.

Unemployment also crept up in several eurozone states - such as Spain, Portugal and Ireland - that have been at the forefront of the debt crisis that engulfed parts of Europe earlier this year.

The jobless rate in the economy built around the euro stood at 9.4 per cent in May 2009.

But the latest figures also raised hopes that the increase in unemployment across Europe over the last year might be starting to level out.

The May unemployment rates were steady in both France and Italy, the eurozone's second and third biggest economies.

But the current high numbers out of work also point to continuing sluggish domestic demand remaining a drag on the currency bloc's growth rate.

'Even if unemployment does begin to fall, wage growth is likely to slow in response to the earlier rise in unemployment. This, together with the tighter fiscal policy, suggests that household spending looks set to remain weak,' said Ben May, European economist with the economics research group Capital Economics.

The prospects of a possible pickup in consumer spending have already emerged in Germany after data released this week's showed Europe's biggest economy chalking up its 12th consecutive monthly fall in unemployment during June.

The May monthly rate compared with the 9.7 per cent unemployment in the US and the 5.2 per cent in Japan. The eurozone April jobless rate was revised down to 10 per cent from an orginal estimate of 10.1 per cent.

But since the April eurozone figures were published about a month ago both economists and financial markets have grown worried about the risks to the global economic recovery petering out in the coming months.

Friday's release of Europe's latest jobless data marks the end of a volatile trading week for world shares markets with stocks hit by a batch of downbeat economic indicators from the US, Europe and China.

The deepening sense of uncertainty surrounding the global economic outlook follows the financial market turmoil unleashed by Europe's debt meltdown.

This also comes as several leading governments around the world move to cutback high deficit and debt levels run up during last year's recession.

The unemployment rate in the 27-member European Union came in at 9.6 per cent in May 2010, also unchanged compared with April. It was 8.9 per cent in May 2009.