• Euro Zone Unemployment Rates Hits Record High
• 282,000 Extra Young People Out Of Work y-o-y
• Gloomy Forecasts From Top Forex Brokers

As the globe reels from the news that the US’ manufacturing sector declined for the first time in three years, new unemployment figures from across the euro zone have emerged to show the tangible human cost of the worsening debt crisis.  

Unemployment continues to climb across the single currency bloc with the euro zone setting a new record high in May. The jobless rate now stands at 11.1 percent, from 11 percent in April, constituting over 17.5m Europeans now left queuing up outside job centres.

For many top forex brokers and analysts, the unemployment rate is hardly a surprise given the almost consistent downward trend for euro zone economic indicators. Howard Archer, chief UK economist at IHS Global Insight: "With the euro zone likely having suffered appreciable GDP contraction in the second quarter and in grave danger of contracting again in the third... the likelihood is the euro zone unemployment rate will move significantly higher over the coming months."

The data from the EU’s statistic office Eurostat revealed that lay-offs in France and Spain had pushed up the overall jobless rate in the single currency area. While across the rest of the EU, the rate also nudged higher to 10.3 percent in May from 10.2 percent in April.

Youth Unemployment Reflects EU Divisions

The jobless rate, particularly for under-25s, has continued to reflect the deepening divisions between EU nations in terms of economic health. The highest rates of youth unemployment are now located in debt-laden Greece and Spain at 52.1 percent each, while Germany has managed to hold on to its enviable rate of 7.9 percent.

Youth unemployment rates showed that an additional 282,000 people under 25 are now out of work across the EU compared with a year ago. This means that over 5.5m young people are now unemployed in the single currency bloc, with majority of those located within the euro area itself.

The data also showed that one in three young Italians are now without a job, with unemployment rate hitting 36.2 percent in May amid a worsening economic backdrop.

Gloomy Forecast From Top Forex Brokers

“Unemployment will continue to rise until we see an improvement in the economy, and that may not be until next year”, Steen Jakobsen (pictured) of top forex broker Saxobank said of the EU’s prospects moving forward. “The next few months are likely to constitute a low in the growth cycle”, he said.

Despite supposed progress having been made at a recent EU Summit, the outlook remains pessimistic from a number of economists at top institutions. The consensus is that unemployment could now reach as high as 12 percent if manufacturing in the area does not recover. The US has now joined the majority of European nations in manufacturing contraction, according to data released yesterday. And, as Allister Heath of City A.M. identifies this morning, “China too is in negative territory”…the signs are not good for ascension out of the economic mire.

Sarah Cox, Markets Writer. ForexSpace.com.