Overall economic activity in the euro area is likely to remain too weak through 2013 and very possibly during the early months of 2014, though GDP could have finally stopped contracting in the second quarter after a record six quarters of decline, IHS Global Insight Chief UK and European Economist Howard Archer said.

Though the recently emerged positive economic data has eased pressure on the European Central Bank (ECB) to cut its interest rate, weakening growth outlook for the currency bloc might prompt the central bank to cut the policy rate by 25 basis points within the next few months, the economist said. According to Archer, the spike in Eurozone unemployment, as the latest data released by the Eurostat revealed yesterday, underlines the fact that the region continues to face major headwinds and still has its work cut out to return to growth.

A general turnaround in Eurozone labor markets still looks some way off so unemployment seems set to rise appreciably further and reach 12.5 percent by the end of 2013, and there is a grave danger that it could continue rising into 2014. However, the situation will likely vary markedly between countries.

Further, IHS Global Insight observed that the renewed pick up in Eurozone inflation in May does not signify a marked pick in underlying inflationary pressure, but only reflects difficult base effects as energy prices had fallen sharply last year. The firm forecasts that inflation would hover around 1.5 percent for some time to come, barring any marked sustained move back up in oil and commodity prices over the coming months. Underlying price pressures should continue to be constrained by still muted economic activity, excess capacity and ongoing wage moderation amid high and rising unemployment.

Latest data released by the Eurostat showed that unemployment rate in the currency bloc climbed to a record high of 12.1 percent in May from 12 percent a month earlier, marking the twenty-fifth consecutive rise. The number of jobless persons increased by 67,000 during the month.

Separately, data from the latest consumer price survey showed that Eurozone inflation rose to 1.6 percent in June from May's 1.4 percent and April's three-year low of 1.2 percent. Inflation, however, continued to remain below the ECB's target rate of "close to, but below 2 percent".

Inflation was pushed up mainly by a 1.6 percent gain in energy prices. In a sign that underlying price pressures remain muted, core inflation edged back during the month.

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