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Eurozone Unemployment Hits Another Record High

At present, the five euro countries at the forefront of the debt crisis â¿¿ Greece, Spain, Italy, Cyprus and Portugal â¿¿ are in recession. Others could well join them in the months to come.

The currency bloc's powerhouse economies, such as Germany and France, have also seen growth levels fall in the last year and that's increased pressure on businesses to cut costs. Industrial conglomerate Siemens AG, for example, announced Friday it would cut another 4,700 jobs, though not all in Germany.

Germany's unemployment rate in October was unchanged at' 5.4 percent. France's was steady too, albeit at nearly double Germany's at 10.7 percent.

Separately, households got some good news in Eurostat figures showing the annual inflation rate in the eurozone fell by more than anticipated to a 23-month low of 2.2 percent in November from 2.5 percent the previous month.

Since it was a preliminary estimate, no reason for the fall was given but waning labor market pressures to lift wages are likely to have been, at least partially, behind the fall.

"We think inflation could fall quite a bit further over the next year or so in response to the spare capacity in the economy, helping to ease the squeeze on households' real incomes," said Jonathan Loynes, chief European economist at Capital Economics. "But whether that will get them spending in an environment of austerity and rising unemployment is another matter."

Despite the November decline, inflation is still above the ECB's target of keeping price rises at just below 2 percent. Few economists think the ECB will cut its main interest rate from the current record low of 0.75 percent at its monthly policy meeting next Thursday.

____

Don Melvin in Brussels and Greg Keller in Paris contributed to this story

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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