The figure, including new eurozone members Malta and Cyprus for the first time, was the highest since the single currency was introduced to world markets as an accounting currency in 1999. It rose from 3.1% in the previous two months and stayed well above the 2% ceiling preferred by the European Central Bank (ECB) for the fifth consecutive month. Inflation in the euro zone has been rising in the previous months, due to hiking oil and food prices. It was 2.6% in October and 2.1% in September. It last hit 3.1% in May 2001, months before the euro came into circulation. High inflation has put the Frankfurt-based ECB into dilemma. In order to take care of an economy, which was already under rising downward risks due to the recent financial turbulence and possible recession of the US economy, the Frankfurt-based central bank has put its interest rate hike into a halt since June, before which it had raised interest rates eight times in one and a half years to contain inflation.

The economic confidence in the euro zone decreased further in January, while business climate indicator also dropped, the European Commission said on Thursday. The economic sentiment indicator in the euro zone stood at 101.7 in January, down by 1.7 points from that in December last year. It was the eighth consecutive month that the economic confidence weakened. The monthly indicator, based on business and consumer surveys, also declined by 2.6 points to 103.2 in the EU, according to revised figures. The surveys are conducted in different sectors of the economy, namely industry, services, construction and retail trade as well as consumers. In both the euro zone and the EU, the decline in the sentiment indicator reflects a decline in all or most of the sectoral indicators.

Confidence in the services, retail trade and construction sectors and among consumers worsened in both areas. Sentiment in the manufacturing sector also declined in the euro zone but remained unchanged in the EU as a whole. Despite the continuous worsening, the commission said the indicator still remained above its long-term average in both areas. At the individual country level, the picture was fairly mixed, with an approximately equal number of countries reporting increases and decreases in sentiment. Among the large EU member states, confidence deteriorated in Germany, Britain and France, each down by 2.0 points, 2.3 points and 0.9 point. Meanwhile, the business climate indicator (BCI) for the euro zone also continued to decline in January, the European Commission said in a separate report released yesterday.

The decrease in the BCI was essentially caused by a worsening of industry managers’ assessment of their export order books. Their appraisals of total order books and of the production trend observed in recent months also contributed to the decline but to a lesser extent. Their views of the stocks of finished products remained unchanged, while their production expectations improved somewhat. The commission said the indicator was still at a relatively high level, which suggests that economic activity in the industry sector would continue to grow at a solid pace, despite the deceleration in industrial production growth registered in November 2007.

The eurozone unemployment remained at its record low level of 7.2% in December last year, Eurostat said on Thursday. It was the lowest level since the indicator was introduced in 1993 and much lower than 7.8% registered in December 2006. Among the previous 13 member states, the Netherlands recorded the lowest unemployment, which was 2.9%. Jobless rate in Germany, the largest economy in the euro zone, dropped further to 7.8%, down from 7.9% in November, according to revised figures, while France’s unemployment also declined to 7.8%. Cyprus and Malta adopted the euro as from the beginning of this year, bringing the total number of eurozone countries from 13 to 15. In the 27-nation EU, unemployment decreased further from 6.9% in November to 6.8% in December. It was 7.6% in December 2006, according to revised figures.

The Eurostat estimated that there were 16.2 million people unemployed in the EU in December, among which 11.0 million were in the euro zone. As a comparison, jobless rate in the United States was 5.0% in December 2007, and the Japanese rate was 3.8%. (people.com.cn)