The Euro area unemployment rate increased to a near three-year high in February as industries cut their workforce on falling economic activity.
The jobless rate stood at 8.5% in February, the highest since May 2006, compared with January's revised 8.3%, the Eurostat reported Wednesday. The jobless rate stood above the expected 8.3% and the 7.2% recorded in February 2008.
The statistical office upwardly revised the unemployment rate for January from 8.2%.
The number of unemployed persons increased 319,000 from January in the Euro area. Meanwhile, unemployment went up 2.125 million from February 2008.
According to European Union's statistics office, the EU 27 jobless rate was 7.9% in February compared to 7.7% in January. A year ago, the unemployment rate stood at 6.8%.
Among the Member States, the lowest unemployment rate was recorded in the Netherlands and the highest rates in Spain and Latvia. Compared to a year ago, seven member states recorded a decrease in their unemployment rate, nineteen reported an increase and the rate remained stable in one.
Bulgaria and Slovakia registered the largest decreases in unemployment. At the same time, the biggest increases were reported in Lithuania, Latvia and Spain.
The jobless rate for males rose to 8.1% in February from 6.5% last year and the female unemployment stood at 8.9% compared to 8.2% prior year.
The Organization for Economic Cooperation and Development projects Eurozone's GDP to drop 4.1% in 2009 and by 0.3% next year. Weak export markets, falling investment and a continuing credit crunch will hit Euro area activity hard over the coming six months, it said. The think tank expects unemployment rate to rise to 10.1% this year from 7.5% in 2008.
To alleviate mounting pressures on the economy, the European Central Bank had lowered its key interest rate by half a percent to a record low of 1.5% in March. The central bank is expected to cut rate further to 1% on April 2. Further, the central bank is also expected to adopt additional unconventional policy measures.
Wednesday, reports citing Markit Economics said the Purchasing Managers' Index for the Eurozone manufacturing sector rose to 33.9 in March from a record low of 33.5 in February, but down from a preliminary estimate of 34. A reading above 50 indicates expansion in the sector, while below 50 suggests contraction. The pace of decline in Eurozone manufacturing activity slowed in March compared to the fall seen in February.
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