Euro zone July output, Q2 employment fall

BRUSSELS, Sept 14 - Euro zone industrial output fell in July and employment dropped again in the second quarter, pointing to continued weakness in the economy despite signs that euro zone recession may be ending.

Industrial output in the 16 countries using the euro fell 0.3 percent month-on-month in July for a 15.9 percent year-on-year fall, the European Union's statistics office Eurostat said on Monday.

Economists polled by Reuters had expected a 0.2 percent monthly decline and a 16.6 percent annual drop.

The year-on-year numbers, however, showed clearly the contractions in output are becoming smaller. In June, production was 16.7 percent lower than a year earlier and in May it was 17.6 percent, better than the 21.3 percent in April.

Eurostat also said employment in the euro zone fell 0.5 percent in the second quarter against the previous three months, and was 1.8 percent lower than the year before.

This points to continued weakness of the labour market, as companies scale down production capacity because of weak demand.

Employment is likely to feel the effects of the nascent recovery last, economists say, but more people without jobs mean less demand in the economy and therefore a slower recovery.

Eurostat estimated that in the second quarter of 2009, 145.6 million people were employed in the euro area, 702,000 people fewer than in the previous three months.

Eurostat said there were job cuts in all sectors of the economy recorded except for public administration, health and education, where employment grew 0.5 percent in the euro zone.

The job cuts were in manufacturing, construction, financial services and business activities, agriculture and trade, transport and communication services.