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Eurozone Unemployment Remains Stable

James Boston
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Eurozone Unemployment Remains Stable

The headline European Unemployment rate has just been released by Eurostat, this is still showing at the elevated 11.60% level as the gradual reduction experienced earlier in the year appears to have become a stall. In the current environment of flat line economic and price growth there was little expectation from the markets for any further decrease in the numbers this month.

Italy also posted it’s May unemployment data this morning and this has disappointingly produced a reversal of the trend lower. Today’s reading was 12.60% which represents a .10% rise from Aprils number of 12.50%.

Germany, which too published unemployment data earlier today, managed to hold it’s headline rate at 6.7% as expected. However on a more granular level it can be seen that 9k individuals were added to the Unemployment statistics during the month. This is a slowing of the 25k added in May but hopes were for an overall fall in the absolute number of unemployed.

There are valid fears of structural unemployment emerging within the Eurozone as the rates of jobless remain persistently high and those made unemployed by the crises develop into long-term unemployed. Government policies across the bloc are having marginal impact on the various unemployment rates but the absence of economic activity is proving too strong of a drag on the employment markets.

Today’s unemployment data can only add to the pressures of the European Central Bank’s Governing Council. Both unemployment and inflation remain at poor but manageable levels, but these are levels at which if they remain persistent will further entrench the stagnation that has befallen the Eurozone recovery. The more stagnant that the economy becomes the less effective future stimulus actions become as inertia sets in, this must propel the ECB closer to large scale and meaningful quantitative easing action and sooner rather than later.

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