Europe's jobless rate lowest since 2008 amid recovery

FRANKFURT - Unemployment in the 19 countries that use the euro fell to its lowest level in nearly a decade as the region extends its robust economic rebound after a crisis over too much debt.

The European Union's statistics agency Eurostat said Wednesday that the jobless rate fell to 8.5 per cent in February from 8.6 per cent the month before.

The proportion out of work is the lowest since December 2008, shortly after the bankruptcy of U.S. investment bank Lehman Brothers plunged the word into a financial crisis and many parts of the global economy, including the eurozone, into deep recessions.

The eurozone then struggled with a crisis over excessive government and bank debt in much of the period since, that at various times threatened to break up the currency union. With confidence low in many parts of the eurozone, notably Greece, the region endured years of sub-par growth and dangerously low inflation.

The fall in the rate came as number of jobless fell by 141,000 to 13.9 million. That's the first time the number of people unemployed in the eurozone has fallen below 14 million since January 2009.

While the economy is growing solidly, expanding by a decade-high rate of 2.5 per cent in 2017 and lowering unemployment from a peak of 12.1 per cent in 2013, inflation remains benign.

Consumer prices rose 1.4 per cent in the year to March, up from 1.1 per cent the month before, but below the European Central Bank's goal of just under 2 per cent.

Analysts said the headline figure was likely boosted by a calendar effect, since Easter fell in March this year. That likely led to an acceleration of inflation in some items, such as air fares and package vacations.

Perhaps of concern to policymakers at the European Central Bank, Eurostat found that core inflation, which excludes volatile food and fuel prices, remained stubbornly low at 1.0 per cent. That suggests that underlying inflation pressures emanating from such things as wage increases remain muted.

ECB President Mario Draghi has sought to explain the failure of wages to pick up substantially to the recent era of low interest rates and too-low inflation. They, he says, may have been "internalized" by wage negotiators, many of whom may also have been focused more on job retention than on securing higher pay.

To get inflation towards its goal, the ECB has slashed interest rates, including its main one to zero, and used monthly bond purchases to pump newly printed money into the economy.

The central bank for the eurozone says the purchases will continue at the pace of 30 billion euros ($37 billion) per month at least through September. Analysts think the bank will then halt or phase out the purchases over ensuing months.

The ECB is predicting a pick-up in inflation over coming months as lower unemployment starts to work itself through the eurozone.

Economist Jessica Hinds at Capital Economics said there is "still plenty of slack in the labour market" with high jobless rates of 16.1 per cent in Spain, 10.9 per cent in Italy and 8.9 per cent in France.

"Core inflation remained weak in March, so the bank will continue to stress its patient and persistent approach to monetary policy normalization," she said.


jonesie
JONESIE: You're barking up the wrong end of the pipeline
OPINION When I was a kid growing up, it seemed like the concept of litter wasn’t fully understood. We’d hit the Tas-T-Mill for a pizza pop or the Five & Dime for snacks and it wasn’t even a consideration to b

Top News