Italy Unemployment Rises to Record High | 12.9 percent

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Italy’s unemployment rate rose to a record high in January, signaling that companies may fail to hire even after the economy returned to growth in the last quarter of 2013.

Unemployment increased to 12.9 percent from 12.7 percent in December, the Rome-based national statistics office Istat said in a preliminary report today. The January rate is the highest since the data series began in the first quarter of 1977. The median estimate of five economists surveyed by Bloomberg called for an unemployment rate of 12.7 percent last month.

On Feb. 22 Prime Minister Matteo Renzi took the helm of the nation that had emerged in the fourth quarter from its longest recession on record. This week the new premier has pledged to overhaul Italy’s labor market during his first 100 days in office. To prompt companies to hire and revive the domestic consumer demand, he plans to use about 10 billion euros’ ($13.7 billion) worth of spending cuts to reduce the personal income tax and a regional business levy.

Still, those measures may not be enough to guarantee expansion and a halt to the unemployment (ITMUURS)’s rise in the euro area’s third-largest economy.

On Feb. 25 the European Commission cut its growth forecast for Italy, saying the nation’s gross domestic product will rise 0.6 percent this year. In its previous projections released in November the commission predicted 0.7 percent economic growth. The Brussels-based commission also estimated that Italy’s unemployment won’t decline to 12.4 percent until 2015.

Italian industrial production fell 0.2 percent this month after a 0.5 percent rise in January, business lobby Confindustria said in estimates released yesterday. Istat will post the production figures for last month on March 10.

Joblessness among people between the ages of 15 and 24 rose to a record 42.4 percent from December’s 41.7 percent, today’s Istat report showed.