Europe News

Euro zone unemployment stuck, recovery stalls

The euro zone's unemployment rate held steady in May, at 11.6 percent, in a further sign that the region's bumpy recovery is struggling to take hold. It followed separate data which revealed that manufacturing activity in the euro zone slid to a seven-month low in June.

Some 18.55 million people were unemployed across the currency bloc in May, according to Eurostat data published Tuesday, a fall of 28,000 from April. However this reduction in joblessness was not enough to drive the unemployment rate lower.

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The lowest unemployment rates were recorded in Austria and Germany, at around 5 percent. However joblessness remained worryingly high in Greece (26.8 percent in March 2014) and Spain (25.1 percent).

The youth unemployment rate, meanwhile, came in at 23.3 percent for the euro zone in May. Joblessness among the under-25s was a particular issue in Greece, Spain and Croatia where the most recent figures put youth unemployment at 57.7 percent, 54 percent and 48.7 percent respectively.

"While euro zone unemployment has eased back gradually from its peak levels seen in 2013, the euro zone jobs problem is far from over as unemployment remains damagingly high and it seems unlikely to come down substantially for some time to come," Howard Archer, chief European economist at IHS Global Insight, said in a note.

"A gradual downward creep in unemployment seems most likely over the coming months."

Manufacturing loses momentum

The region's final manufacturing Purchasing Managers Index (PMI) for last month, published by Markit on Tuesday, came in at 51.8 in June, below an earlier flash estimate of 51.9.

Euro zone going through 'growth rotation': Pro
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Euro zone going through 'growth rotation': Pro

Growth in both new orders and output in the sector fell since May, when the PMI reading was 52.2.

Read MoreECB to 'take it easy' after June's fireworks

It does, however, mark the twelfth month in a row of growth in the sector, with a reading over 50 marking expansion.

Manufacturing conditions in the euro zone were brightest in Spain and Ireland, where activity hit an 84-month high and 2-month high respectively. Meanwhile in the U.K., which is not part of the currency bloc, June's manufacturing PMI rose to 57.5 - the highest level since November 2013.

However activity continued to contract in France, the euro zone second-largest economy, where it fell to a six-month low of 48.2. France has been dubbed the "sick man of Europe" by some analysts, after economic growth ground to a halt in the first quarter.

IHS' Archer said France's PMI reading was "particularly disappointing and worrying".

"This reinforces concerns over the underlying state of the French economy and suggests that it is struggling markedly for growth after GDP (gross domestic product) was only flat in the first quarter," he added.

The PMI data is the latest sign that the region's recovery may be slowing. Two closely watched economic indicators—Markit's composite PMI (which includes both the manufacturing and services sectors) and the European Commission's Economic Sentiment Indicator—weakened in June.

Read MoreEuro zone inflation steady ahead of ECB meeting

The final composite figure—or any revision to the flash estimate released last month—is set for release later this week. It comes after the euro zone's economy grew by just 0.2 percent in the first three months of the year, quarter-on-quarter.

Archer said euro zone GDP was like to have edged up in the second quarter, growing at around 0.3 percent on the quarter, but "it is evident that the euro zone is currently clearly finding it hard to build appreciable growth momentum".

—By CNBC's Katrina Bishop