· Unemployment is creeping higher in France, with the unemployment rate for May holding at April's 10.2% of the labor force, according to INSEE's monthly labor force survey, released today.  The rate there, defined according to the ILO specifications used throughout the Euro-Zone, has been on a upward trend since the slowdown in economic activity began in late 2000 (there has been no "official" recession in France as there was in the US).

· INSEE also published its household confidence survey for June, which showed a continuing erosion in the overall indicator.  The current reading, -30, is the lowest since survey questions were revised in November 2003.  More people reported that their living standards had deteriorated during the last year, that this is a poor time to make make major purchases and that they expect to have difficulty saving over the next year.  On the less worrisome side, interestingly, their concerns over unemployment prospects actually diminished.  And that variable has only weak correlation with the unemployment rate itself.  The overall index and the assessment of the household's current financial condition are much more closely related to the current unemployment rate, as seen in the graph.

· Germany's unemployment situation continues to make news, although the figures reported today for May and June actually look better.  The ILO-defined rate fell 0.3 percentage point in May to 9.3%.  This is not "low", but does give the impression that the climb in the rate that had begun in December may have run its course.  "Registered" unemployment, the count of people registered with government unemployment offices, edged down in June to a rate of 11.7% from 11.8% in May; this rate peaked in March at 12.0%.  Local observers, quoted in a Reuters news story, point out that the new "Hartz IV" regulations are starting to take effect, reducing unemployment benefits and requiring unemployed workers to accept new jobs more quickly.  Thus, it is too early to conclude that these slight improvements in both unemployment rates mark a genuine firming of German economic activity.  In fact, ever higher energy costs continue to cast a cloud on the economic outlook everywhere.