Unemployment in the euro zone unexpectedly rose in December because of an increase in the number of jobless in the single currency area's biggest economy, Germany, data showed today.
The European Union's statistics office Eurostat said the unemployment rate in the 12 countries using the euro rose to 8.4 per cent from 8.3 per cent in November and October, despite economists' expectations of a fall to 8.2 per cent.
"This suggests euro zone companies remain keen to keep their labour forces as tight as possible to contain costs," said Howard Archer, chief European Economist with Global Insight.
"This reinforces our belief that euro zone labour markets will only see limited and erratic improvement over the coming months, which is likely to curtail the upside for consumer spending," he said.
Separately today, the RBS/NTC Research Eurozone Purchasing Managers' Index showed euro zone manufacturers went back to cutting jobs in January. and there was limited potential for job gains in coming months due to the high cost of raw materials.
Germany's Labour Office yesterday said German unemployment rose unexpectedly in January to 11.3 per cent from 11.2 per cent in December.
Eurostat today said in the whole of the EU, unemployment was unchanged for a third month at 8.5 per cent. Some 12.2 million people were out of work in the eurozone, and 18.6 million in the 25-member EU as a whole.
The data comes a day before the European Central Bank meets to set interest rates.
Economists say the bank is likely to keep the cost of borrowing unchanged at 2.25 per cent.
But they expect it to increase interest rates in March by 25 basis points after business sentiment surveys provided evidence that an economic recovery is strengthening despite the high price of oil.
The persistently high euro zone unemployment rate is one of the reasons why consumer demand remains fragile, denying the economy an important driver.