Coronavirus: EU unemployment rate hits 7.2% in July

The unemployment rate in the European Union rose marginally to 7.2% in July, even as the bloc’s member states broadly eased coronavirus restrictions.

While the figure, up from 7.1% in June, is the highest since 2018, it is markedly lower than the level seen in the aftermath of the financial crisis.

Eurostat, the union’s official statistics agency, said that almost 15.2 million people were unemployed in the bloc in July, including almost 12.8 million in the eurozone, the 19-member currency area that uses the euro.

For the bloc as a whole, that represents an increase of around 336,000, Eurostat said.

The EU’s closely watched measure of youth unemployment, which measures the number of people under the age of 25 who are out of work, rose to 17% in the month, indicating that more than 2.9 million of them were out of work.

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The bloc has been particularly dented by the coronavirus pandemic, which forced several of its major economies into sweeping lockdowns.

The European Central Bank has said that the recovery in the eurozone, which comprises more than 85% of the bloc’s overall economic output, has been “uneven and partial” thus far.

According to the central bank’s forecast, economic activity in the eurozone will not return to its pre-pandemic levels until the end of 2022, suggesting the bloc is set for a drawn-out recovery.

The bloc slid into a steep recession in the first half of 2020. While the bloc saw an initial rebound, several indicators suggest that the pace of growth is already slowing.

Overall, the level of economic activity remains well below the levels seen before the coronavirus pandemic, and the ECB has repeatedly warned that the outlook for the bloc is “highly uncertain.”

The bloc in July reached a deal on a historic €750bn (£670bn) stimulus package that will see EU member states take on joint debt for the first time.

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Meanwhile, the ECB has said that it will continue purchases under its sweeping €1.35tn (£1.2tn) coronavirus bond-buying programme until at least the end of June 2021.

The scale of the package will allow the bank to buy up most of the debt that will be issued by eurozone governments this year to fund their crisis stimulus measures.

Separate data from Eurostat revealed that core inflation in the eurozone fell to an all-time low of 0.4% in August, far below analyst forecasts of 0.9%.

The worsening inflation outlook will be one consideration of the ECB’s governing council when it decides whether to expand its crisis programmes at its next meeting on 10 September.