Eurozone unemployment rate stable at 9.8%, but more declines coming up - ING

Bert Colijn, Senior Economist at ING, notes that the Eurozone unemployment rate remained stable in November after declines in September and October.

Key Quotes

“As businesses are indicating that hiring will remain strong in the coming months, it seems likely that job growth will continue to provide tailwinds for the economic recovery.”

“It is no wonder that consumer confidence is booming, as almost 1 million people left unemployment in the Eurozone in the past year. Since August unemployment has declined by more than 300 thousand people and businesses are indicating that hiring is set to continue. In November, France saw unemployment decline by 0.2% to 9.5%, but Germany and Spain saw little movement in the number of unemployed, while Italy saw the rate tick up to 11.9%.”

“Job growth slowed this summer, when the Brexit vote caused uncertainty among businesses. When the initial impact of the vote turned out to be more subdued than expected, hiring picked up again. At the moment, employers in both industry and services are expecting the pace of hiring to remain strong in the coming months as new orders are picking up and expectations for production in the coming months are increasing. Only in France manufacturing producers are expecting to reduce headcount in the months ahead, but in services they are indicating stronger job growth.”

“Even though the labour market is getting tighter, it does seem that there is still enough slack for wage growth to remain very subdued for the moment. Labour cost growth picked up somewhat in the third quarter, but is still well below historical levels. It seems unlikely that wage pressures will pick up in a meaningful way before the second half of the year, and even then it will probably just have a subdued effect on inflation. As always in the Eurozone labour market, things are moving slowly.”