In the 16 nations using the single currency, 15.09 million people were unemployed in July -- the seasonally-adjusted rate of 9.5% marking a watershed last seen in May 1999, the European Union's Eurostat agency said.
Compared with June, that meant a rise of 167,000 in the unemployed across the eurozone -- and 225,000 across the EU as a whole.
The figures for the full EU bloc were 9%, estimated at 21.794 million people out of work, the highest rate since May 2005.
The highest unemployment rates were recorded in Spain, at 18.5% after its economy was further battered by a massive slump in its once-powerful construction sector while the Baltic nations of Latvia and Lithuania were almost as bad.
In Germany, the biggest eurozone economy, there was a slight increase in its jobless numbers to 8.3%, according to local figures for August.
The lowest unemployment rate was recorded in the Netherlands at 3.4.
Even when growth returns, as has been the case in the major eurozone economies of Germany and France with an expansion of 0.3% each in the second quarter, there is a substantial time-lag before employment levels pick up.
An index of manufacturing activity in the 16-nation eurozone, also released on Sept. 1, showed August levels edging ever closer towards expansion of the manufacturing base.
Analysts warned too of a further deterioration in the labor market despite other economic indicators being broadly positive. They said higher stock markets and stabilizing property prices are little comfort to the millions out of work who face more suffering in what could be a jobless recovery.
The key 'exit strategy' question for political leaders is whether rising unemployment will put the brakes on recovery just as the massive stimulus programs adopted to cope with the crisis have to be scaled down.
Economist Howard Archer of IHS Global Insight underlined the impact of such government efforts within the context of a clear improvement in business confidence since March lows. But while such incentives may have helped contain job losses, he warned that "eurozone unemployment still seems likely to rise markedly higher, thereby posing a serious threat to growth prospects over both the near- and medium-term. "We suspect that economic activity will remain too weak to actually generate net jobs until at least the second half of 2010," Archer said, even though he expects other eurozone economies to return to growth in coming quarters.
Warning that the eurozone is "unlikely to see trend growth until 2011," he said is "way too early to start talking about exit strategies -- the financial sector itself still has fundamental problems and it remains to be seen how much of the present signs of recovery are down to the" stimulus measures.
Copyright Agence France-Presse, 2009