Let's turn to the recent data to get a better idea for the deteriorating fundamentals, starting with the still worsening employment situation:
The euro area1 (EA17) seasonally-adjusted2 unemployment rate3 was 12.1% in March 2013, up from 12.0% in February4. The EU271 unemployment rate was 10.9%, stable compared with February4. In both zones, rates have risen markedly compared with March 2012, when they were 11.0% and 10.3% respectively. These figures are published by Eurostat, the statistical office of the European Union.
Here's a chart of the data:
Starting in the 1Q12, we see the unemployment rate start to tick up consistently. Also notice how there has been absolutely no pause in the rise. This alone would be of concern to any central bank. But the news continues to get worse.
The EUs manufacturing sector's problems are worsening. From the latest Markit manufacturing report:
- Final Eurozone Manufacturing PMI at four month low of 46.7 (flash: 46.5)
- German output contracts for first time in 2013, joining ongoing downturns elsewhere
- Job losses recorded across the currency union, as March recoveries in Germany and Austria prove short-lived
All the major economies are now below 50. Some have been at that level for over a year, indicating a prolonged contraction.
Finally, retail sales contracted in the latest report:
In March 2013 compared with February 2013, the volume of retail trade1 fell by 0.1% in the euro area2 (EA17) and by 0.2% in the EU272, according to estimates from Eurostat, the statistical office of the European Union. In February3 retail trade decreased by 0.2% in the euro area, but rose by 0.1% in the EU27.
And a chart of the data shows the deteriorating condition of the sector:
Simply put, the EU remains mired in recession with little to no indication of getting out anytime soon.