Joblessness is down but eurozone still suffers, say analysts
Unemployment in the eurozone fell for the first time in two years in June, but City analysts warned that the single currency's economic problems were far from resolved.
Eurostat reported that joblessness across the 17-nation bloc fell by 24,000 to 19.27 million over the month – the first drop registered since March 2011. The unemployment rate in Spain fell from 26.4 per cent to 26.3 per cent. In Italy it dipped from 12.2 per cent to 12.1 per cent. The jobless rate in Portugal fell from 17.6 per cent to 17.4 per cent.
However, this improvement was offset by an increase in the unemployment rate in France from 10.9 to 11 per cent and in the Netherlands from 6.6 per cent to 6.8 per cent. Overall, the eurozone unemployment rate was flat on the month at 12.1 per cent. Youth unemployment was also up, rising from 23.8 per cent to 23.9 per cent. In Spain the jobless rate among under-25s rose from 55.8 per cent to 56.1 per cent. In Italy it rose from 38.3 per cent to 39.1 per cent.
"Both European leaders and the European Central Bank know that unemployment rates at these levels still pose a threat to the stability of the eurozone," said Peter Vanden Houte of ING Bank. And Jonathan Loynes of Capital Economics said that regional differences were a reason to be nervous about the outlook for the single currency. "The huge divergences [in the unemployment rate] between countries – from 4.6 per cent in Austria to 26.3 per cent in Spain – are a powerful reminder of the still enormous economic imbalances inside the currency union" he said.
Eurostat also reported yesterday the annual inflation rate across the single currency was 1.6 per cent in July. Core inflation fell from 1.2 per cent to 1.1 per cent, but food, alcohol and tobacco prices were up 3.5 per cent on the same month last year.
The ECB is expected to keep rates on hold at 0.5 per cent today, but some analysts said the central bank president, Mario Draghi, might choose to strengthen his guidance to financial markets that rates will remain low for an extended period. "With market pricing still pointing to more tightening than was expected in early May, Draghi may seek to deepen that guidance," said Huw Pill of Goldman Sachs.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
New era of cheap oil 'will destroy green revolution'
Ukip founder Alan Sked and Nigel Farage 'begged Enoch Powell to stand as a candidate'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
iJobs Money & Business
£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...
£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...
£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...
£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...