(MENAFN– ecpulse) European unemployment missed forecast in May yet the euro area still struggles to get on recovery path, while inflation rebounded in June to raise speculations the ECB will not act this week.
Unemployment in the 17-nation region rose to 12.1%, coming below expectations of 12.3%, from April’s reading which was revised down to 12.0% from 12.2%.
Monday`s report showed that the number of people unemployed soared by 67,000 from the previous month to 19.2 million people.
A report from Italy released today showed that unemployment in the euro area’s third-biggest economy climbed to 12.2% in May from 12.0% in April as it suffers from the longest economic recession in two decades.
The highest rate remains in Spain which suffers from a record of 27% joblessness in the first quarter and 26.9% in May, the highest since at least 1976, on six years of slump, where the IMF has warned that Spain risks high unemployment and sluggish growth for years unless its takes “urgent action.”
Yet in Germany, the rate unemployment dropped in June by a seasonally adjusted 12,000 to 2.94 million.
The euro area economy remained in recession after dropping 0.2% from the first three months of this year following a contraction of 0.6% in the last three months of 2012.
The World Bank expected last month that contraction in the euro area would reach 0.6 percent this year, compared with the previous projection of 0.1 percent, while growth would rebound to 0.9 percent in 2014 and 1.5 percent in 2015.
A report released today showed a rise in European manufacturing to 16-mnth high at the last month of the second quarter as the PMI gauge rose to 48.8 from 48.3 in May with the ease in contraction in France, Italy, the Netherlands, Austria and Greece.
“Price stability is assured, and the overall economic outlook still warrants an accommodative stance,” Draghi said on June 25.
Inflation, measured by annual CPI, rebounded to 1.6 percent in June from 1.4 percent in May, buoyed by surge in energy prices which increased 1.6 percent, while prices of food, alcohol and tobacco soared 3.2 percent, and cost of services edged up 1.4 percent.
The rebound in inflation for a second month will lower expectations of seeing another interest rate by the ECB this week.
Draghi said last week that the ECB is ready to act if needed but the banks efforts solely will not resolve crisis as governments have to continue with reforms.
As of 09:11 GMT, the euro traded higher versus U.S. dollar around 1.3041 after hitting a low of 1.3004 and a high of 1.3052.
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