The look ahead: European debt crisis unfolds. Will it dampen US jobs outlook?
Cyprus, which is trying to join the growing ranks of European bailout recipients, could get a thorough evaluation in the coming week, as European leaders continue to try to solve the region’s economic problems.
Cyprus on Monday joined Greece, Ireland, Portugal and Spain in applying for aid from EU rescue funds. The Mediterranean island state’s bailout package could reach €10 billion, Reuters reported.
Officials from the European Commission, the European Central Bank (ECB) and possibly the International Monetary Fund are expected to travel to Cyprus in the coming week, according to Reuters. Banks in Cyprus are heavily exposed to Greece, which is mired in a debt crisis.
Meanwhile, there is a chance that the ECB will cut interest rates at its July 5th meeting. The ECB’s main refinancing operations rate was last cut to a record-low-tying 1% in December.
Euro-zone jobless and GDP numbers, to be released in the coming week, will provide a broader view of the 17-country region.
The labour market in the euro zone has deteriorated for a year, with joblessness hitting 11% in April and March, the highest unemployment rate since records began in 1995. About 17.4 million people were unemployed in April. Germany and Ireland saw small decreases, but France, Italy, Spain and Portugal recorded rising unemployment. The May unemployment figures are due out Monday.
On July 4th, Eurostat will follow up with revised first-quarter GDP figures. The euro zone’s economy stagnated in the first quarter after a decrease in GDP the quarter before. The second quarter is shaping up for another contraction.
US employment picture
The European crisis has been a threat to the US recovery. And in the week ahead, we’ll see if the US economy has continued to slow as a result.
The nation’s unemployment rate, which dropped to a three-year low in April, rose slightly in May – the first uptick since June 2011. On July 6th, the US Bureau of Labor Statistics will release its Employment Situation Report for June 2012.
The report will follow the release of several other jobs reports that could shine light on the nation’s economic outlook. Challenger, Gray & Christmas, for instance, will issue its latest job cut report. The outplacement company reported that US employers announced plans to cut 61,887 workers from their payrolls in May – the most since last September.
—From CGMA Magazine staff reports.