FRANKFURT, Germany (AP) — The unemployment rate across the 19 countries that use the euro currency rose modestly to 7.9% in July, official figures showed Tuesday. The number of people losing their jobs has been held down by temporary government job-support programs and the relaxation of some coronavirus containment measures.
However, weaker inflation amid sweeping announcement of layoffs suggest that the eurozone economy faces a long struggle to recover.
The eurozone's overall jobless rate inched up from 7.7% in June as the number of people labeled as unemployed increased by 344,000, according to Eurostat. In the same month a year earlier the jobless rate was 7.5%
Government programs that pay part of worker’s wages if companies do not lay them off have helped keep millions on the job but the respite may not last as the coronavirus continues to restrict travel and activity.
Major employers have announced thousands of layoffs to counter what is expected to be reduced business in the months ahead. Some are household names such as automaker Renault, airline Lufthansa, travel company TUI, and industrial conglomerate ThyssenKrupp.
Virus cases have risen in Spain, France and Germany in recent days, raising fears of a further wave of restrictions on gatherings and activity.
A further sign of weakness in the eurozone economy was evident in August inflation figures showing consumer prices falling by 0.2% from the year before. The negative reading was down from a 0.4% increase in July. Analysts attributed some of the drop to the late timing of summer sales in France and Italy.
The European Central Bank is pumping 1.35 trillion euros ($1.6 trillion) in newly printed money into the economy through bond purchases, a step aimed at pushing up inflation to more normal levels and supporting the recovery. ECB officials have said the bank intends to use the full amount due to the bank’s baseline expectation for a very subdued inflation outlook.