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Euro zone optimism, despite unemployment

Friday, August 30, 2013 - 01:20

Aug. 30 - Optimism in the euro zone's economy improved sharply in August - but high unemployment remains stubborn. Kirsty Basset reports.

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There's growing optimism about the euro zone's economy, according to the latest survey by the European Commission. Based on orders and companies' hiring plans, business managers' confidence increased 2.7 points to 95.2. The trend was particularly strong in Germany and the Netherlands, but also in Italy, France and Spain. It's the latest in a stream of positive data from the region which is leading some to say the worst of the crisis may be over. Michael Metcalfe is Head of macro strategy at State Street. (SOUNDBITE)(ENGLISH) HEAD OF MACRO STRATEGY AT STATE STREET, MICHAEL METCALFE SAYING: "The challenge now is to generate growth of course, but the crisis element - will the euro exist? seems to be past." Nonetheless, unemployment remains at a record high - unchanged from the previous month at 12.1 percent. (SOUNDBITE)(ENGLISH) HEAD OF MACRO STRATEGY AT STATE STREET, MICHAEL METCALFE SAYING: "Yes there's a lot of reasons to be concerned about euro zone growth going forward and unemployment is a massive challenge. I think that's the one that the policy response in terms of whatever it takes got rid of the risk premium but they haven't yet met that challenge and they will need to do so." Part of that challenge will be addressing the gulf between the recovering north and the struggling south - with almost 7 percent unemployment in Germany, but a whopping 28 percent in Greece.

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