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Eurozone Unemployment Hits 3-Year High - 2003-05-06

The jobless rate in the 12 nations that use the euro currency has hit a three-year high, according to the latest figures from the European Union's statistics agency, Eurostat.

Unemployment in the euro zone rose to 8.7 percent in March, up from a revised 8.6 percent the previous month. That means 12.2 million people are out of work. This is the highest euro-zone unemployment rate since February 2000, according to Eurostat.

International uncertainty, the fall of global stock markets and a slow global economy are major factors, says Ferdy Adam, an economist with the Luxembourg government's statistics agency, Statec.

"The European economy is being hit by the global economic slowdown which realized [began] in 2000 and 2001," he said. "There was a slight acceleration of activity in 2002, but it was not enough to stop unemployment from going up."

Mr. Adam says that while the unemployment rate is high, the increase in Europe has been gradual.

Analysts say the high euro-zone unemployment will mean a slower economy and lower demand for imports from developing countries. So far, demand for consumer goods has remained high because of the strong euro, but that could change if the high unemployment continues. They say European demand for raw materials from developing countries is already down.

Meanwhile, further increases in the euro-zone jobless rate could be coming, according to indications from companies. A survey released by the European Commission says firms in the euro zone were more pessimistic about the economic outlook in April and reported a decline in their employment expectations.

In another development, euro-zone producer-price inflation in March is up 2.4 percent from a year earlier.

But the strong euro, which has hit four-year highs against the dollar, is expected to bring down prices as it makes raw materials like oil, cheaper in euro terms. The euro traded as high as $1.13 Tuesday.