Unemployment in the eurozone has dropped to its lowest level for almost 12 years after the number of jobless people fell by 592,000 last year, adding to hopes of a recovery in the region’s sluggish economy.
The seasonally-adjusted unemployment rate in the 19 countries using the euro fell from 7.5 per cent in November to 7.4 per cent in December — its lowest level since May 2008 — with the biggest improvements of last year reported in Greece, Bulgaria and Croatia.
The continued strengthening of the jobs figures will be welcomed by the European Central Bank, which is hoping that tighter labour markets will push up wage growth, encouraging customers to spend more and companies to push up prices.
Unemployment in the eurozone peaked at 19.3m at the height of the eurozone debt crisis in 2013, falling steadily since then to reach 12.25m in December. Youth unemployment remains high at 15.3 per cent, but that is down from a peak of 23.9 per cent.
“Amid a robust labour market, consumers remain confident about their own financial situation,” said Florian Hense, economist at Berenberg. “As Germany recovers gradually and France resolves its strike disruptions, we also look for the rest of the eurozone to return to a healthier pace of growth.”
Mr Hense forecast eurozone economic growth would be only 0.1 per cent in the fourth quarter, when those figures are announced on Friday, but he said quarterly growth would accelerate to 0.4 per cent by the second half of the year.
In a further positive signal for the eurozone economy, a monthly survey of businesses by the European Commission found a better than expected improvement in sentiment in January — driven by a rebound in the outlook of companies in Germany.
The commission’s economic sentiment indicator rose from 101.3 in December to a five-month high of 102.8 in January. The rise reflected improved sentiment in the industrial and construction sectors, while consumer and services sectors were flat and confidence among retailers fell.
The positive economic data — including higher inflation across much of Germany in January — was offset by growing concerns about how the spread of the coronavirus outbreak in China could hit the world economy.
“Overall, today’s data were a bit better than anticipated, but are not enough to change our view that eurozone economic growth will remain subdued during the first half of this year, and that any subsequent recovery will be weaker than many anticipate,” said Melanie Debono, European economist at Capital Economics.
Data published earlier on Thursday showed that German unemployment had remained flat at 5 per cent in January, after adjusting for seasonal factors. “The unemployment rate seems to have bottomed out, suggesting that the labour market may now have reached a cyclical peak.” said Nicola Nobile, lead economist at Oxford Economics.
Source: Economy - ft.com
