Italy May jobless rate jumps to 6.5% but 80,000 jobs created in month

Italy’s unemployment rate rose sharply to 6.5 per cent in May from an upwardly revised 6.1 per cent in April, national statistics bureau ISTAT reported on Wednesday, but a net 80,000 jobs were created during the month.

A Reuters survey of nine analysts had forecast a May jobless rate of 6.0 per cent.

April’s rate had been previously reported at 5.9 per cent.

The reason for the jump in the unemployment rate was that a large number of previously inactive people entered the labour market in May to look for work, ISTAT said. The 6.5 per cent jobless rate was the highest since June last year.

The youth unemployment rate, measuring job-seekers between 15 and 24 years old, rose to 21.6 per cent from 19.9 per cent.

In the March-to-May period, employment in the eurozone’s third largest economy was up by 93,000, or 0.4 per cent, compared with the previous three months, ISTAT said.

In May, there were 408,000 more people in work than in the same month last year, an increase of 1.7 per cent.

The employment rate, one of the lowest in the Eurozone, edged up to 62.9 per cent from 62.8 per cent the month before, while the so-called “inactivity rate”, measuring those neither working nor looking for work, fell to 32.6 per cent from a previous 33 per cent.

Italy’s long-running increase in employment has come against a backdrop of weak economic growth and stagnant wages.

Italian gross domestic product grew by just 0.7 per cent in each of the last two years, and the government forecasts 0.6 per cent growth this year.

Meanwhile Italy risks losing 20 billion euros ($23.6 billion) in exports and 118,000 jobs next year if the US imposes tariffs of 10 per cent on all European products, the head of the main Italian business lobby said on Wednesday.

“Italy does not just export luxury products - with a demand that isn’t very sensitive to prices - but mainly machinery, means of transport, and leather goods,” Confindustria President Emanuele Orsini told daily Il Corriere della Sera in an interview.

Italian Prime Minister Giorgia Meloni recently downplayed the potential impact of such a level of tariffs on Italian companies, stating it would not be particularly harmful.

Orsini, however, warned that tariffs of 10 per cent would be unsustainable for the Italian economy.

He added that they would effectively translate into a 23.5 per cent duty as the impact of the dollar depreciation against the euro since the election of US President Donald Trump, amounting to 13.55 per cent, needed to be taken into account too.

“A product that a year ago an Italian company was selling in the United States for 100 now costs our American customer 123. We fear very heavy setbacks,” he added.

A deadline for countries to finalise trade agreements with Washington is set to expire on July 9.

The European Commission, which coordinates EU trade policy, accepts the US baseline tariff of 10 per cent as unavoidable but wants immediate relief in key sectors as part of any agreement, according to diplomats.

The euro has risen some 9 per cent against the dollar since April as investors, spooked by Trump’s unpredictable economic policy, warmed to the European Union’s newfound military and industrial ambitions.

Meanwhile sales of new cars in Italy fell by 17.44 per cent in June, transport ministry data showed on Tuesday, in the biggest year-on-year drop this year.

Total sales in June stood at 132,191 vehicles.

Market leader Stellantis, whose brands include Fiat, Jeep, Chrysler and Peugeot, suffered an even bigger crash, with sales down 32.83 per cent year-on-year, according to Reuters calculations.

Its market share dropped to 24.55 per cent from 28.06 per cent in May, according to the same calculations.

Meanwhile the number of people registered as unemployed in Spain fell in June to the lowest figure since May 2008, before the bursting of a real estate bubble led to a deep crisis in the country.

According to data from the Labour Ministry released on Wednesday, a total of 2.41 million people were registered as unemployed in June, down by 48,920 from the previous month.

The number was not that low since 2.38 million jobless people in May 2008.

Unemployment traditionally falls in Spain during the summer when the hospitality industry hires thousands of workers to serve the millions of tourists who visit the country.

Spain gained 40,399 net formal jobs in June, bringing the number of people with a formal job to 21.6 million, on a calendar-adjusted and excluding seasonality, a separate report from the Social Security Ministry showed.

Reuters