Published: Dec 1, 2010 00:46 Updated: Dec 1, 2010 00:46
BRUSSELS: Euro zone unemployment inched up in October, leaving another 80,000 out of work across the currency area, while inflation in November was unchanged, offering no hint of pressure for tighter monetary policy.
Unemployment hit 10.1 percent from a downward-revised 10.0 percent in September as it rose in Italy, inched down in France and held stable in Germany and Spain.
EU statistics office Eurostat said the number of people without a job rose by 80,000 to 15.95 million people. In the whole European Union of 27 countries it was up by 84,000 people to 23.15 million.
EU statistics office Eurostat also said in a flash estimate that consumer prices in the 16 countries using the euro rose 1.9 percent year-on-year in November, the same figure as in October and in line with forecasts by analysts polled by Reuters.
With current inflation in line with the ECB's target of below, but close to 2 percent and economic recovery still fragile, analysts expect the bank to keep its main interest rates at its historic low of 1.0 percent well into 2011.
Analysts say the ECB's meeting this week may slow its exit from crisis measures, acknowledging the threat a sovereign debt crisis poses to European growth and the need to help avoid it spreading further.
"There remains a compelling case for the ECB to keep interest rates down at 1.0 percent not only at its December policy meeting on Thursday but deep into 2011, given that there are serious concerns over the longer-term outlook for euro zone expansion," said Howard Archer, chief European economist at IHS Global Insight.
The figure was also in line with expectations and was the highest since July 1998, signaling problems in many countries with consumer demand, which is key for making economic growth self-sustainable.
The rise was mainly due to an increase in unemployment in the third biggest economy Italy, to 8.6 percent from 8.3 percent. France, the second biggest economy, saw the jobless rate fall to 9.8 percent from 9.9 percent.
In Spain, where jobs have been hit especially hard by the recent economic crisis, unemployment remained unchanged at 20.7 percent.
Unemployment held stable in euro zone powerhouse Germany at 6.7 percent. Strong German expansion helps fuel euro zone growth, which is dampened by economic difficulties of fringe countries such as Greece and Ireland.
"We suspect that unemployment will rise modestly further, which may well limit the upside for consumer spending," Archer said.
The European Commission forecast on Monday that the euro zone economy will expand by 1.7 percent this year and growth will slow to 1.5 percent in 2011.
But growth could be hit by tensions on euro zone debt markets triggered by fiscal problems in Greece, Ireland, Portugal and Spain.
On inflation, Eurostat will publish full figures and a breakdown in mid-December. Analysts say price growth is expected to remain subdued in the coming months, and will depend mainly on the evolution of costs of energy and food.
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