Eurozone unemployment declines again in February - ING

Bert Colijn, Senior Economist at ING, suggests that the Eurozone labour market is still providing tailwind for growth, but momentum is declining.

Key Quotes

“The Eurozone unemployment rate declined to 10.3% in February from an upwards revised 10.4% in January. With a decline of 39,000 unemployed, this is the 13th month of declining unemployment in a row. While dark clouds packed over the Eurozone economy in the beginning of the year, the labour market has continued to provide tailwind. The improvements in unemployment continue to fuel domestic demand in times when consumers have become more cautious. This will likely mitigate the negative effects of people more concerned about the state of the global economy.

The improvements are not evenly spread across the Eurozone though. France and Italy saw the number of unemployed increase in February, although in France this did not lead to a higher unemployment rate. Germany and Spain saw unemployment decline again, with the unemployment rate in Spain falling from 20.5% to 20.4%. The continued struggle to reduce unemployment in France and Italy will likely have a dampening effect on domestic demand in the coming months.

While the labour market continues to improve, unemployment is known to be a lagging indicator. Surveys have recently indicated that employers are currently cautious to see how the market turmoil of the beginning of the year is playing out, which could result in more subdued hiring in the months ahead.