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Eurozone labor market stabilizing as economy grows

BRUSSELS (AP) -- Unemployment across the 17 European Union countries that use the euro held steady in August, official figures showed Tuesday, in another sign that the eurozone economy is stabilizing following its longest-ever recession.

Eurostat, the EU's statistics office, said the unemployment rate was 12 percent in August, unchanged from the previous month and down modestly from the 12.1 percent peak recorded in the summer. In total, the number of unemployed dipped by 5,000 to 19.18 million.

The improvement in the eurozone labor market has come in the wake of the region's emergence from recession. The economy grew in the second quarter after contracting for six straight quarters and most surveys suggest it expanded further in the summer months.

That view was supported by a closely-watched manufacturing survey Tuesday that suggested the sector continues to expand, albeit at a modest pace. The purchasing managers' index — a gauge of business activity published by financial information company Markit — was at 51.1 points in September. Though down on August's 26-month high of 51.4, the survey points to continuing expansion — anything above the 50 threshold indicates growth.

Few economists think that the eurozone's current economic growth is enough to significantly bring down unemployment, particularly among the young. The manufacturing PMI survey, for example, showed companies in the sector still expect modest job losses.

"Unemployment looks set to fall only very gradually at best," said Ben May, European economist at Capital Economics.

The Eurostat figures mask huge divergences across the eurozone: While Germany has an unemployment rate of 5.2 percent, Greece and Spain have over a quarter of their workforce out of a job.

The situation among the young — that is, potential workers under the age of 25 — is even more acute. Greece and Spain, for example, have over half their youth unemployed. In Greece, where the latest figures available were for June, youth unemployment stood at a stunning 61.5 percent.