Unemployment in the 17-member eurozone jumped to an all-time high of 10.7 per cent in January, underlining the challenges facing European leaders as they gather in Brussels for a summit dedicated to finding ways to restart the continent's economy.
The figures represented the loss of an additional 185,000 jobs from December, according to Eurostat, the European Union's statistics arm, and were slightly worse than the 10.4 per cent many economists had forecast.
The situation remained particularly severe in Spain, where unemployment hit 23.3 per cent in January, up from 20.6 per cent a year ago. Spain's youth unemployment came in just shy of 50 per cent.
The grim news on jobs was accompanied by a rise in inflation, with the consumer price index edging up to 2.7 per cent in February as a result of high oil prices brought on by a cold winter.
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Howard Archer, an economist at IHS Global Insight, called the reports a "double whammy" for the eurozone.
"This is particularly bad news for consumers as they are not only facing high and rising unemployment but also still squeezed purchasing power," said Mr Archer. "The data reinforce our belief that the eurozone is headed for further gross domestic product contraction in the first quarter of 2012 at least."
The jobs picture revealed the growing division between the northern and southern member states after two years of crisis. While Spain, Greece, Ireland and Portugal all continue to suffer with double-digit unemployment, the jobless rate was just 4 per cent in Austria, 5 per cent in the Netherlands and 5.8 per cent in Germany.
Steen Jakobsen, an economist at Saxobank, told Reuters he was concerned to see unemployment continuing to rise in Spain and Italy.
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"There's a huge divergence between the feelgood factor in the stock market and what's happening in the real economy," Mr Jakobsen said. "For all the money the [European Central Bank] is printing, there isn't yet a big boost for companies in terms of credit."
European heads of government will try to address the jobs crisis at a two-day summit in Brussels that begins on Thursday evening. They are expected to discuss a range of structural reforms that have long been touted by the European Commission, the EU's executive arm, for their potential to enhance growth.
Some of the measures include deepening the EU's single market, particularly for services, and further liberalising national energy markets.
But the latest jobs report could also sharpen an emerging debate among member states about whether the austerity measures taken so far to shore up public finances and combat the crisis have proved self-defeating by weakening growth.
That debate could be particularly relevant for Spain, which cited the economic slowdown when it asked the Commission for greater leniency in meeting previously agreed targets to trim its budget deficit.