Unemployment and Inflation Inch Up in Europe

PARIS — The unemployment rate in the euro area inched up to touch double digits in February, while inflation accelerated more than economists had forecast, probably a result of higher food and oil prices, according to data released Wednesday.

Eurostat, the European Union’s statistics agency, said that seasonally adjusted unemployment in the 16 nations that use the euro rose to 10 percent in February from 9.9 percent in January, the highest rate since August 1998. The figure had been put at 10 percent in November, but it was subsequently revised down to 9.9 percent.

For the 27 members of the European Union, the rate in February was a more moderate 9.6 percent.

The highest rate recorded in a major European economy was in Spain, at 19 percent, up from 18.9 percent a month earlier. The lowest level was in the Netherlands, at 4 percent. In France, the jobless rate was 10.1 percent, Eurostat said.

In a separate report for March, the German Federal Labor Agency said that unemployment in that country had fallen in March. The number of people out of work fell by 31,000 to 3.38 million, the agency said. The seasonally adjusted jobless rate declined to 8 percent from 8.1 percent.

Marco Valli, chief Italian economist at UniCredit Research in Milan, said that the pace of job shedding across the euro zone appeared to be easing. He said he expected the unemployment rate to peak at 10.7 percent either late this year or in early 2011.

Still, the overall outlook for the region remains mixed, the European Commission said in a quarterly report released Wednesday. “While the euro-area economy is recovering, it is still facing significant headwinds,” it said. “The weak labor market outlook dampens demand, and many of the growth sources being of temporary nature, the robustness of the EU recovery is yet to be tested.”

The report also warned about “intra-euro-area imbalances” and said that “up to now, the crisis has led to a narrowing of current account differences within the euro-area, but only modest correction of past competitiveness divergences between member states.”

That theme appears to be something that has vexed the French in particular. Comments in March by the French finance minister, Christine Lagarde — who delicately criticized the German economic model in an interview with the Financial Times — appear to have upset German officials and revived decades-old debates about which economic model Europe should follow. Germany is pursuing tight fiscal discipline, wage moderation, export and supply-side driven growth, while France has used consumer demand and public spending to post its moderate growth rates.

At the moment, the German model appears to be reaping more dividends. Business confidence in Germany climbed in March to the highest level since June 2008, the Ifo institute said last week. German plant and machinery orders are also rising, recent data show.

Meanwhile, another release from Eurostat on Wednesday showed that consumer prices in the 16-nation euro region had increased 1.5 percent in March from a year earlier, after a 0.9 percent gain in February. The number was an initial estimate; full details will be released April 16.

Analysts said the increase appeared to have been driven by energy prices and higher food prices, as cold weather this winter pushed up the price of fresh food.

Nick Kounis, chief European economist at Fortis Bank Nederland, said releases from individual countries in the euro zone suggested that core inflation, which excludes food and fuel, might also have risen. But he added that the increase in core inflation was likely to be temporary, as production remained below capacity and as wage growth remained subdued.

“This should mean that, despite ongoing upward pressure from food and energy prices, headline inflation should remain below the E.C.B.’s price stability goal,” which is close to but below 2 percent, Mr. Kounis said. He added that he did not expect the central bank to raise rates any time soon.

In contrast to the situation in Germany, consumer confidence in Britain unexpectedly slipped in March as households became more pessimistic about the economy weeks before a general election, a market research company, GfK NOP, said Wednesday. Its index of sentiment fell to minus 15 from minus 14 the previous month and minus 30 in March 2009.