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File photo of people standing in line to enter a government-run employment office in Madrid.

ANDREA COMAS/REUTERS

Morale among businesses in the euro zone improved again in December, but the unemployment rate reached a new record and households held back from spending in the run-up to Christmas, suggesting the bloc's emergence from recession will be slow.

Economic sentiment in the 17 countries using the euro rose by 1.3 points to 87 in the second straight month of gains after almost a year of falls, the European Commission's monthly business and consumer survey showed on Tuesday.

Optimism that the euro zone is beginning to recover from a deep banking and public debt crisis was tempered by data from the EU's statistics office Eurostat showing joblessness in November at the highest level since the euro was introduced in 1999.

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Euro zone unemployment rose to 11.8 per cent of the working population or 18.82 million people, and 113,000 more people were without a job than in October, as companies ranging from car makers to retailers let go of staff.

Feeble demand was evident in retail trade data that was also released by Eurostat on Tuesday, showing a mere 0.1 per cent rise in sales volumes in November from the previous month, not enough to account for sharp falls in August, September and October.

Another month of falls was only avoided in November because European motorists spent more on fuel. Sales of food and drinks fell even in the run-up to the year's busiest shopping season.

While business morale has been helped by a series of steps to prevent the break-up of the euro zone, rising unemployment and stalled consumer spending underscore just how difficult the euro zone's economic recovery will be.

Consumer spending generates about half of the euro zone's economic output and the bloc is relying on Asian and U.S. demand for its exports to generate growth at a time when major economies are only beginning to recover from the damaging repercussions of the euro zone's crisis.

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