The euro area unemployment rate extended its upward trend in February, reaching the highest level since 1997. The unemployment rate rose from 10.7% to 10.8%, in line with expectations. According to Eurostat, the number of people unemployed rose by 162 000 from the previous month. The youth unemployment rate jumped to 21.6% in February.
The highest unemployment rates were reached in Greece and Spain, while the lowest were reached in Austria, the Netherlands, Luxembourg and Germany. The unemployment rate is now just 0.1% below its record high for the euro area, and will probably rise above it in the coming months as the euro area will probably fall back into a mild recession.
The final figure of euro zone manufacturing PMI for March confirmed the first estimate, which showed a decline from 49.0 to 47.7. National details show that weakness is spreading to the core countries as the manufacturing PMI’s dropped in France (46.7 from a first estimate of 47.6 and 50.0 in February), Germany (48.4 up from a first estimate of 48.1, down from 50.2 in February) and the Netherlands (49.6 from 50.3). The pace of contraction eased slightly in Italy (47.9 from 47.8) and slowed more significantly in Greece (41.3 from 37.7), while Irish manufacturing PMI rebounded from 49.7 to 51.5. In Spain, on the contrary, the manufacturing PMI weakened further in March, falling from 45.0 to 44.5.
The outlook remains weak as new orders contracted at a faster rate than in February, while cost pressures accelerated further. Overall, it is a mixed back of data, confirming that weakness is spreading more and more to the core. There are however some bright spots in the weaker peripheral countries which suggest that the manufacturing PMI’s are bottoming out.