Earlier today, Eurostat released the two most important data points for Europe: inflation and unemployment. On the former, there was no surprise at the headline level which remained at 0.2% for the another month, in line with expectations, but core CPI excluding energy, food, alcohol and tobacco, rose to 1.0%, the highest print in 2015 and one which pushed Bund prices well lower.
But it was the unemployment number which showed something unexpected. While the overall unemployment rate for the Eurozone also stayed unchanged at 11.1%, fractionally worse then the consensus estimate of a decline to 11.0%...
... it was renewed concern about what is going on in Italy, where unemployment rose from 12.5% to 12.7%, proving consensus expectations about a strong improvement to 12.3% dead wrong...
... and posing a question just what is going on in the country with the biggest debt load in Europe, and more importantly how is it that Rome is still unable to benefit from the ECB's QE which has pushed Italian yields far below those of the US despite an economy which is suddenly taking on water.
And nowhere was this more visible than in Italy's youth unemployment rate, which surprisingly jumped by nearly 2% to 44.2%, a record level, and one which is starting to rival some of Europe's most troubled nations, such as Spain and of course Greece.
As Bloomberg put it, "Italy’s jobless rate unexpectedly rose in June as businesses continue to dismiss workers amid concerns that the country’s exit from recession may not be sustainable. Youth unemployment jumped to a record-high 44.2 percent.
Unemployment increased to 12.7 percent from a revised 12.5 percent in May, statistics agency Istat said in a preliminary report in Rome on Friday. The median estimate in a survey of nine analysts called for a rate of 12.3 percent.
Youth unemployment in June rose to the highest rate since the series began in 2004, from 42.4 percent in May. Employment dropped for a second month in a row, with about 22,000 jobs lost in June alone, according to the report.
In an indicative case study that not all is well in Italy, Bloomberg reminds us that Telecom Italia SpA said this month it plans to eliminate 1,700 jobs, representing about 3 percent of its workforce, and is delaying a youth-hiring program as Italy’s biggest phone company seeks to reduce labor costs.
Put in context, joblessness in Italy, the euro area’s third-largest economy, has been at 12% or above for more than two years as the record slump deepened before gross domestic product started to rise again at the end of 2014."
On Monday, the International Monetary Fund said in a report that "without a significant pick-up in growth," it would take Italy “nearly 20 years to reduce the unemployment rate to pre-crisis” levels of about half the current one.
Prime Minister Matteo Renzi’s changes to Italy’s labor code showed early results as the number of open-ended contracts taking effect in the first half increased, the government said. Still, executives’ confidence declined this month amid doubts on the outlook for economic recovery and employment.
How long before Italy's repeat-disgruntled youth realizes it was duped once again, and Beppe Grillo emerges on the Italian scene with renewed vigor, and the Greek tragicomedy gets a sequel in the old, Roman style?