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Eurozone jobless rate hits new high

Unemployment in the 17-country eurozone hit a record high of 11.6% in September, the latest official figures show in a sign the economy is deteriorating as governments struggle with the debt crisis.

The rate reported by Eurostat, the EU's statistics office, was up from an upwardly-revised 11.5% in August. In total, 18.49 million people were out of work in the eurozone in September, up 146,000 on the previous month, the biggest increase in three months.

While the eurozone's unemployment rate has been rising steadily for the past year as the economy struggled with a financial crisis and government spending cuts, the United States has seen its equivalent rate fall to 7.8%. The latest US figures are due this Friday.

With the eurozone economy fading, most economists think unemployment will keep increasing over the coming months. Five countries in the eurozone are already in recession - Greece, Spain, Italy, Portugal, and Cyprus - and others are expected to join them soon.

The region as a whole is expected to be confirmed to be in recession when the first estimate of eurozone economic activity in the third quarter is published mid-November - a recession is officially confirmed after two consecutive quarters of negative growth.

"With surveys suggesting that firms are becoming more reluctant to hire, the eurozone unemployment rate looks set to rise further, placing more pressure on struggling households," said Ben May, European economist at Capital Economics.

Recession and unemployment make it more difficult for the eurozone to deal with its debt problem - governments need to pay more benefits to the jobless and receive fewer tax revenues. That could push countries to take even more austerity measures, which in turn weighs on economic activity.

Spain again had the highest unemployment rate in the eurozone, at 25.8%. Greece may yet surpass that - its unemployment rate mushroomed to 25.1% in July, the latest available figure, and is due to increase in the face of what many economists are calling an economic depression. The country is forecast to enter its sixth year of recession next year.

Both countries, which are at the heart of Europe's three-year debt crisis, have youth unemployment above 50%. That risks creating a lost generation of workers and is straining the countries' social fabric. Extremist political groups in Greece and regional separatist parties in Spain have grown in popularity as the economy worsened.

The lowest unemployment rate in the eurozone was Austria's 4.4%. Germany, Europe's biggest economy, has a jobless rate of only 5.4%.

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