The rate in March and April was the highest since the eurozone was created in 1999 and analysts warned it would likely rise further in the coming months.

More than 17.4 million people were jobless in the 17-nation single currency area in April, as 110,000 more men and women joined unemployment queues, according to Eurostat data agency.

Youth unemployment worsened with nearly 3.36 million people under 25 looking for work in May, an increase of 214,000 from the previous month.

A key survey meanwhile showed manufacturing activity sinking to its lowest level in three years as employers shed jobs and crisis-struck Spain hit bottom.

"These data paint a dismal picture of a deepening recession throughout the region," said Jennifer McKeown, senior European economist at Capital Economics.

"The economic downturn is broadening and gathering pace," she said. "This clearly further reduces policymakers' chances of stemming the debt crisis."

European Union leaders are scrambling to jumpstart economies but are divided over how, with powerhouse Germany pressing for continued austerity while France pushes pro-growth policies.

The bloc's 27 leaders failed to bridge differences at an informal dinner last month but will take another shot at a summit on June 28-29 here.

"All in all, today's grim unemployment figures provide a sober reminder that the eurozone economy is in desperate need of a more expansionary policy stance," said ING Bank analyst Martin van Vliet.

Unemployment in the eurozone has remained above 10 per cent for 12 months in a row as the bloc struggles to contain a debt crisis that has spread to Spain, whose banking woes may force it to seek a bailout.

The data showed growing disparities between so-called periphery countries in the south and wealthier northern nations.

Spain recorded again the worst unemployment rate at 24.3 per cent, with more than one in two people under 25 without work. Greece was at 21.7 per cent in February and Portugal at 15.2 per cent in May.

Austria had the lowest rate at 3.9 per cent, Luxembourg and the Netherlands at 5.2 per cent and Germany at 5.4 per cent.

In the wider EU, unemployment rose to 10.3 per cent in April compared to 10.2 per cent in March with some 24.67 million men and women jobless.

Some analysts expect unemployment in the eurozone to rise to 11.5 per cent by the end of the year, though the economy is forecast to slowly recover by then.

"Unfortunately, the downturn in the eurozone labour market is not over yet," van Vliet said, adding: "The downturn may well prove more protracted as the bleak manufacturing PMI figures released earlier today remind us."

The Purchasing Managers Index (PMI), a survey of 3,000 manufacturers compiled by Markit research firm, fell to 45.1 points in May from 45.9 in April. A score below 50 indicates contraction.

The survey brought more bad news to Spain as the country replaced eurozone weakling Greece at the bottom of the list with a reading of 42 points.

Manufacturers continued to cut costs in May and employment fell for the fourth month in a row, with the rate of job cuts accelerating in Germany, France, Spain and the Netherlands. The steepest cuts were in Greece.

"Eurozone manufacturers reported a deepening downturn in May, indicating that the damage to the real economy caused by the region's financial and political crises continues to spread across the region," said Markit chief economist Chris Williamson.

"The rate of decline is nowhere near as severe as that seen at the height of the 2008-09 crisis, but the situation is nevertheless deteriorating at an alarming rate," he said.