Eurozone unemployment falls, strengthening recovery

BRUSSELS: Europe’s economic recovery is gaining pace, with eurozone unemployment at its lowest level since December 2008 and inflation on the rise, official figures showed.

The EU’s official statistics agency said the jobless rate in the single currency area fell to 8.5 per cent in February, down from 8.6 per cent in January.

Eurostat said inflation in the eurozone jumped to 1.4 per cent in March, a leap from February’s 1.1 per cent. That edges inflation closer to the European Central Bank’s (ECB) target although it is still a way off the desired 2.0 per cent.

The data are in line with other recent statistics that suggest the European economy is growing at a solid pace after years of weak recovery following the debt crisis.

The steady decline in joblessness comes on the back of three years of massive support from the ECB

The ECB will tread very cautiously in raising interest rates. Jessica Hinds, economist of Capital Economics

to help the 19-country single currency zone survive the eurozone debt crisis.

The ECB has bought more than two trillion euros (US$2.46 trillion) worth of bonds during that time, helping trigger growth but struggling to push inflation towards its 2.0 per cent goal.

In a sign of growing confidence in the eurozone recovery, the ECB last month dropped a long-standing pledge that it stood ready to ratchet up bond-buying again if needed – taking a small step towards the stimulus exit door.

But inflation remains well below the central bank’s 2.0 per cent target, which may give ECB head Mario Draghi second thoughts about turning the stimulus off completely this year.

“The ECB will tread very cautiously in raising interest rates,” said economist Jessica Hinds of Capital Economics.

“We have pencilled in the first hike for September 2019, which is later than investors seem to expect.”

There were also regional differences in unemployment, which remained high in Greece at 20.8 per cent in December, the last month for which figures were available, Spain at 16.1 per cent, and Italy at 10.9 per cent.

German unemployment remained super-low at 3.5 per cent in February, with the Netherlands dropping to 4.1 per cent.

The youth unemployment rate was also trending downward.

In February, youth unemploy- ment was 17.7 per cent in the euro area, down from 19.4 per cent the same month in 2017.

But rates for people under 25 years old remained high in Spain at 35.5 per cent in February, down from 40.8 per cent a year earlier, and in Italy at 32.8 per cent, down from 35.2 per cent in February 2017. Greece’s rate was a whopping 45 per cent in December 2017, the last month for which youth figures were available, down slightly from 46.7 per cent in February 2017.

“The level of youth unemployment in a number of countries is unacceptably high,” European Commission deputy spokesman Alexander Winterstein told reporters.

“It will not induce young people to be enthusiastic about Europe,” he said when asked if it could hurt during national elections and in European Parliament elections in 2019. — AFP