Joblessness in the 17-nation currency zone rose to 10.8 percent – in line with a Reuters poll of economists – and 0.1 points worse than in January, Eurostat said on Monday.
Economists are divided over the wisdom of European governments’ drive to bring down fiscal deficits so aggressively as economic troubles hit tax revenues, consumers’ spending power and business confidence which collapsed late last year.
February’s unemployment level – last hit in June 1997 – marked the 10th straight monthly rise and contrasts sharply with the United States where the economy has been adding jobs since late last year.
“We expect it to go higher, to reach 11 percent by the end of the year,” said Raphael Brun-Aguerre, an economist at JP Morgan in London. “You have public sector job cuts, income going down, weak consumption. The economic growth outlook is negative and is going to worsen unemployment.”
Separate data released on Monday showed manufacturing activity in the euro zone shrank for an eighth successive month in March, providing further evidence for Brussels’ forecast that euro zone output will shrink 0.3 percent this year.
The European Commission, which along with Berlin is a driving force behind the EU’s debt reduction strategy, said joblessness showed countries must enact difficult reforms.