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Unemployment in the 15 nations that share the euro shot up to 7.7 percent in October - the highest level in two years - as growth dropped sharply, the EU statistics agency Eurostat said Friday.

Prices also plunged with the annual inflation rate sinking to 2.1 percent in November from 3.2 percent in October, Eurostat said. Lower inflation gives the European Central Bank more room to reduce interest rates, which would help stoke growth.

The euro area officially went into a recession in spring and summer this year when growth shrank in the second and third quarters, as a financial crisis curbed global demand.

In real terms, this means job losses - lots of them and more to come.

Eurostat said some 225,000 more people were seeking work in October from the previous month. That means some 12 million people in the euro area were out of work last month. It also said unemployment in September was worse than it had first estimated, revising the rate upward to 7.6 percent from the 7.5 percent it reported last month.

Across all the EU's 27 states, some 17 million people were job-hunting in October, 290,000 more than a month earlier. The EU jobless rate was 7.1 percent in October, up from 7 percent in September.

The EU's executive Commission forecasts that the labor market will get even worse next year, with the euro-zone rate climbing to 8.4 percent in 2009 from a decade-low of 7 percent at the end of 2007. This will see an extra 2 million people out of work.

October Durables Prove Fragile

Decline in orders of manufactured goods is twice as bad as expected.

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October's U.S. durable goods orders proved much less resilient than forecast by economists, falling by its steepest degree in two years, as overall economic weakness sapped demand for bigger-ticket items.

The U.S. government reported Wednesday that October durable goods orders tumbled a sharper than expected 6.2%, versus the 3.0% slide economists had expected. Transportation orders were particularly weak, falling 4.4%, whereas a decline of 1.6% had been forecast. September’s durable goods orders were downwardly revised to a 0.2% fall, from the 0.9% increase initially reported.

U.S. manufacturing is being hurt by the economic slowdown that began with the U.S. subprime mortgage crisis and has since spread around the globe. American exports, which had enjoyed surprising strength this year thanks in part to a weakening dollar, showed new signs of trouble. Demand for autos fell 4.5% in October, and commercial aircraft orders declined 4.7%. Detroit's Big Three automakers were rebufffed by lawmakers last week when they asked for a $25.0 billion bailout loan to help them survive the credit crunch.

October personal consumption expenditures, a measure of price changes in consumer goods and services, were flat month over month, as expected, while core PCE, which excludes food and energy, increased by 2.1% year over year which was a little less than the 2.2% analysts had expected. This backward-looking measure of the change in prices is a favorite of the Federal Reserve, which likes to see core PCE at or below 2.0%.

Personal income rose more than expected during October, increasing by 0.3%, when only a 0.1% gain was expected. The boost in household means did not loosen American wallets, though. Personal spending fell by 1.0% which was two percentage points below the 1.0% increase analysts had forecast. The slide in consumption reflects the sudden vogue for thrift among Americans who are panicked by Wall Street's troubles and increasing Main Street woes such as rising unemployment and foreclosures. Reined-in spending could cause the economy to contract further because consumer spending accounts for roughly 80.0% of U.S. gross domestic product, whose growth turned negative in the most recent quarter.

In a break from a string of recent bad news on the job front (see "Lines Grow A The Unemployment Office"), the Labor Department reported Wednesday that the number of Americans filing for initial unemployment claims was 529,000 during the week ended November 22; analysts had expected 537,000. The week's total was a decrease of 14,000 from the previous week's revised figure of 543,000. However, the four-week moving average, which smooths out fluctuations, came in at 518,000, an increase of 11,000 from the previous week's revised average of 507,000.

--The Associated Press contributed to this article.

The U.S. retail industry shed 38,100 jobs in October as merchants shuttered stores and scaled back sales help to respond to a dramatic drop in spending amid a worsening financial crisis.

That loss, marking the 11th consecutive month of retail job reductions, offers new evidence that the industry will be miserly with their hiring for what's expected to be the weakest holiday season in decades.

Overall, the nation's unemployment rate soared to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut, according to data released by the Labor Department on Thursday. The figures offered more evidence of how the economy is deteriorating.

"It is a bleak season for retailers, and that is going to impact their hiring," said John Challenger, chief executive of Chicago-based outplacement firm Challenger, Gray & Christmas.

October's retail job losses were above the industry's average monthly pace of 30,000 reductions so far this year, according to Frank Badillo, senior economist at TNS Retail Forward.

Motor vehicle and parts dealers suffered the biggest losses, losing 21,400 job. But department stores and general merchandise stores were also hit; both categories lost about 18,000 jobs each. Food and beverage stores lost 6,200 jobs.

Challenger noted that holiday hiring will fall significantly below last year's total, which was the lowest since 2003. He's also seeing that more stores than last year are waiting to the last minute to cement their holiday hiring plans.

In fact, consumer electronics chain Best Buy Inc. said last month that it would hire fewer seasonal workers this year. The Minneapolis-based company said it anticipates hiring 16,000 to 20,000 employees for this holiday season, compared with the roughly 26,000 people it hired for the season last year. The company is also leaving the decision up to the stores as to how many staff to hire, rather than the corporation setting the staffing levels.

This year's holiday hiring levels are also being depressed by the rash of store closings and liquidations that have picked up in recent weeks.

On Monday, Circuit City Stores Inc. announced it was closing 155 of its more than 700 U.S. stores by Dec. 31. That translates to about 17 percent of its domestic work force, which could affect up to 7,300 people.

Specialty retailer Linens 'n Things, which filed for bankruptcy protection in May, announced liquidation sales at its stores last month after failing to find a buyer that wanted to operate the company. Regional department-store chain Mervyns LLC, which filed for Chapter 11 bankruptcy protection in July, said late last month that it's closing its remaining 149 stores and will hold going-out-of-businesses sales.

Meanwhile, toy maker Mattel Inc. said Thursday it's cutting about 1,000 positions worldwide because of the economic downturn. The company said the cuts will come from a combination of layoffs, attrition and retirements and will not affect holiday toy production