Euro area unemployment rate increased 0.1pp to 10.3% in October, in line with our expectations, (BC: 10.3%, consensus: 10.2%). This is the second consecutive 0.1pp uptick in the unemployment rate. Since April 2011 (in 7 months), the euro area unemployment rate has thus edged up by 4 tenths, while it had only dropped 3 tenths from 10.2% - its last cyclical peak in June 2010 - to 9.9% in 10 months.
 
As a result, the series is on track with our expectation of a 0.2pp increase in the euro area unemployment rate in Q4 to 10.3% from 10.1% in Q3. As we have pointed out in yesterday's comment: EC survey follow-up: hiring intentions likely one step away from being negative, developments of our labour market leading indicator are rather worrying, as our hiring intention index for the euro area could turn negative as soon as next month. From this point of view, further weakness is likely. Although we view that yesterday's Eurogroup meeting (Eurogroup meeting: Greece 6th tranche, EFSF enhancements, and call for larger IMF resources) went in the right direction, several grey areas remain and we think they will need to be addressed - possibly as soon as the EU summit of Dec 9 - to restore confidence in financial markets and therefore break the negative feedback loop currently at play.
 

In detail

In October, the number of unemployed in the euro area rose 96k to 16.29mn. Although the rise is less pronounced than last month (+188k), the 3-month moving average of the monthly change is still up above 100k at 105k (down from 125k in September).
 
In terms of the breakdown by country, a 0.3pp increase in Spanish and Dutch unemployment rates to 22.8% and 4.8% respectively were the largest rises recorded, according to the eurostat release. Also significantly contributing to the euro area uptick, Italy and Austria counterparts climbed 2 tenths to 8.5% and 4.1% respectively. In the meantime, Portugal's rate of unemployed edged up from 12.8% to 12.9%. France's unemployment rate remained unchanged at 9.8% in October, for a fifth month in a row, and so did its Irish counterpart at 14.3%. At odds with the general trend, Germany's declined another 2 tenths to 5.5%.
 
 
source: BarCap