Economic confidence in the euro area slumped to the lowest in more than 2 1/2 years in June and German unemployment increased more than economists forecast, adding to signs the economy fell back into a recession.
An index of executive and consumer sentiment in the 17- nation euro area dropped to 89.9 from a revised 90.5 in May, the European Commission in Brussels said today. Thatâ€™s the lowest since October 2009. In Germany, the number of people out of work rose a seasonally adjusted 7,000 to 2.88 million, a separate report showed. Economists in a Bloomberg News survey had forecast a gain of 3,000 in the month.
Rising unemployment in Europeâ€™s largest economy underscores indications of a deepening economic slump as the sovereign-debt crisis shifts from periphery states to core members. European leaders are meeting in Brussels today to discuss ways to stem contagion of the debt turmoil that this month forced Spain and Cyprus to seek aid.
Germany wonâ€™t be able to disconnect from the euro-region developments,â€ said Christoph Weil, an economist at Commerzbank AG in Frankfurt. â€œThe second quarter will show an economic contraction and there are no signs of improvement for the following three months. Whether the situation stabilizes afterward hinges decisively on the euro crisis and latest developments are no real reason for optimism.â€