Europe News

Euro zone jobless at record high as retail sales surge

Unemployment in the euro zone remained stuck at its record high of 12.1 percent in November, while retail sales rebounded over the month, rising at their fastest pace in 12 years.

The headline unemployment rate was in line with economists' expectations, and has been stuck at 12.1 percent for eight straight months following revised figures.

The figures paint an even more gloomy for those under the age of 25, with youth unemployment rising by 2,000 to 3.575 million in the euro zone. The rate increased to 36.8 percent in Portugal, 41.6 percent in Italy and a massive 57.7 percent in Spain.

Dominique Faget | AFP | Getty Images

The divergent picture across different regions continued with headline rates of unemployment. In the periphery, Portugal and Ireland's unemployment both fell; Spain and France's rates held steady, but Italy's increased to 12.7 percent -- the highest since records began in 1977.

(Read more: Euro zone economic recovery gathers steam)

Despite this high joblessness, however, consumer demand surged ahead in November. Separate data also released Wednesday revealed that retail sales across the euro zone rose by 1.4 percent in November from the previous month.

This marked their strongest monthly rise since November 2001, with both core and peripheral countries seeing a sharp increase in sales.

James Howat, European economist at Capital Economics, said November's euro zone unemployment data indicated that the region's labor market downturn was starting to ease.

"Looking forward, survey measures of employment intentions suggest that euro-zone employment might start expanding again over the coming quarters, albeit at a slow pace," he said in a note.

(Read more: Deflation fears return as euro zone inflation slips)

"November's rise in euro-zone retail sales also provided evidence that pressure on households is slowly easing. Overall, the outlook is starting to brighten a little for euro-zone consumers."

Europe needs more structural reforms: Wolin

It comes after data published Tuesday revealed that inflation in the euro zone came in lower than expected in December, adding to concerns that the euro zone could be heading towards a period of deflation.

Consumer prices rose by 0.8 percent year-on-year in December, below the 0.9 percent expected by economists and close to October's 47-month low of 0.7 percent which spurred the European Central Bank (ECB) to cut its main interest rate.

On Thursday, the ECB will announce its latest monetary policy decision – and although the majority of economists are not expecting the central bank to act this month, inflation figures could lead to calls for more stimulus in 2014.

(Read more: ECB unlikely to deploy its artillery, but pressure grows)

There are, however, signs that economic recovery in the euro zone is gathering pace. On Monday, data revealed that services and manufacturing activity in the region expanded in December. The Markit composite purchasing managers' index (PMI) data showed that activity in the sectors rose to 52.1 in December, up from 51.7 in the previous month.

But economists were quick to point out that although the region as a whole appeared to be doing well, growth in the sectors was again uneven on a regional level.

Germany, Ireland and Spain's PMIs, for example, all came in well above the 50-point mark indicates expansion. But France's negative trend accelerated in December, with services and manufacturing activity hitting a seven-month low.

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