(c) 2013, Bloomberg News.
(c) 2013, Bloomberg News.
MADRID — Euro-area unemployment held at a record in July, underscoring the challenges that face the 17- nation currency bloc as it tries to shake off the legacy of a debt crisis now in its fourth year.
The jobless rate in the euro zone remained at 12.1 percent, the European Union's statistics office in Luxembourg said Friday. That's in line with the median of 31 economists' estimates in a Bloomberg News survey. Unemployment among young people increased to 24 percent.
"We have a very bleak outlook for unemployment in the euro area as a whole," said Anatoli Annenkov, senior economist at Societe Generale in London. "The main headwinds remain high policy uncertainty in the euro area and still-fragmented financial markets, while we also expect several countries to need more fiscal consolidation."
The bleak jobs report runs counter to a growing body of data that show the euro area's economic recovery building momentum after the bloc exited a record-long recession in the second quarter. The Stoxx Europe 600 Index has gained 3.6 percent in the last two months. Economic confidence in the euro zone increased in August to the highest since August 2011, the European Commission in Brussels said Friday.
"Europe looks pretty attractive," said Sheila Patel, chief executive officer of International Goldman Sachs Asset Management, commenting on European equity valuations during an interview with Bloomberg Television on Aug. 27. "If you look at profitability, if you look at business trends, there is a recovery."
European Central Bank President Mario Draghi said this month that while risks to the economy continue to be on the downside, he expects a gradual recovery in the second half of the year. The ECB has pledged to keep interest rates low for an extended period after it cut its benchmark rate to a record low of 0.5 percent in May.
Unemployment is proving resistant to Europe's improving economic fortunes, and may help to explain why economists in a separate Bloomberg survey see growth slowing to 0.1 percent in the third quarter after a 0.3 percent expansion in the three months through June. Analysts forecast the jobless rate won't drop below 12 percent through 2015.
In Germany, unemployment unexpectedly rose in August for the first time in three months, according to the the Nuremberg- based Federal Labor Agency, and inflation slowed in a sign that Europe's biggest economy is cooling after a second-quarter surge.
ThyssenKrupp, Germany's biggest steelmaker, plans to cut 3,000 administrative jobs over three years and this month said it will shut two plants at Neuwied. Salzgitter, the rival steelmaker that predicts a loss for 2013 amid waning demand in Europe, will eliminate more than 1,500 positions.