Eurozone unemployment rises as factory slump continues

Unemployment in the eurozone hit 11.1% in May while the downturn in its manufacturing sector continued, according to official statistics.

A total of 17.56m people are now out of work marking the highest level since records began in 1995, according to EU statistics body Eurostat.

Meanwhile, the manufacturing Purchasing Managers' Index (PMI), compiled by Markit, was stuck at 45.1 in June.

Any reading below 50 indicates contraction.

The data compounds the gloomy outlook for the eurozone where companies have reduced or frozen spending levels - including labour costs - as fears over the impact of the ongoing debt crisis have reduced confidence in future growth.

Joblessness in the eurozone has risen for the past 14 months.

In Spain, which has the highest unemployment rate in the 17-bloc nation, one in four people is now out of work.

The downturn in employment is reflected in the eurozone's manufacturing sector. The closely-watched manufacturing PMI's unchanged reading of 45.1 in June means it remains at its lowest reading for three years.

The survey's employment index fell to 46.7 in June, its lowest since January 2010, from 47.1 in the previous month, signalling accelerating job cuts.

"Companies are clearly preparing for worse to come, cutting back on both staff numbers and stocks of raw materials at the fastest rates for two-and-a-half years," said Chris Williamson, chief economist at data provider Markit.