Euro zone January unemployment stable at 9.9 pct

Euro zone unemployment remained at 9.9 percent in January and the previous month's jobless numbers were lower than previously thought, data showed, defying expectations of further labour market deterioration. The European Union's statistics agency said unemployment in the 16-country currency area stayed unchanged from the downwardly revised December reading. It had previously estimated December unemployment at 10.0 percent.

The jobless rate last reached 9.9 percent in October 1998. Economists polled by Reuters had on average expected a 10.1 percent rate for January.

Eurostat said 15.683 million people were unemployed in the euro area in January, up by 38,000 against December. Since January 2009, some 2.2 million people in the zone have lost their jobs.

Unemployment in the whole European Union of 27 countries was 9.5 percent, unchanged from December. This meant 22.979 million people were out of work, 136,000 more than in December.

Unemployment is a lagging indicator, slow to react to economic developments. Analysts expect it to peak around 11 percent in 2010 and damp economic recovery by curbing private demand.

The lowest jobless rate among euro zone countries was in the Netherlands, at 4.2 percent, and Austria, at 5.3 percent. Spain, hit hard by the collapse of its construction sector, had the highest unemployment at 18.8 percent.

Germany, the euro zone's biggest economy, registered the smallest increase in unemployment since a year earlier — it rose to 7.5 percent from 7.2 percent.