Shrinking trade balance, robust manufacturing and service sector growths help matters, reports Team IFM
Brussels/New York, June 20: With Europe taking the long but steady road to recovery, the region’s joblessness is also shrinking and becoming more stable, at least two separate reports have said, while a third independent study said the expanding manufacturing and services sectors saw only a modest increase in payrolls.
In its quarter-wise job situation report of Eurostat, the European Union’s statistics office, said employment in the euro zone rose for the second consecutive quarter in the first three months of the year.
“In a sign the recovery was finally helping the labour market,” Eurostat said, “a widening trade surplus signalled a further positive contribution to growth in April.”
According to the region’s statistics office, the number of persons employed in the 18 countries sharing the euro rose by 0.1 percent during the quarter in the three months to March, and was up by 0.2 percent on the year, the first annual rise since the third quarter of 2011,.
In its month-wise report on the job sector for April, the New York-based think tank The Conference Board, the unemployment rate remained “stable” in all European economies compared except the Netherlands, where it declined slightly.
According to the unemployment rates and employment growth data compiled and standardised by the Board’s International Labor Comparisons (ILC) programme, joblessness in the Netherlands declined from 7.3 to 7.2 percent in April.
In the US, it said, the unemployment rate fell from 6.7 to 6.3 percent, the largest monthly decline since December 2010.
The trend is continuing in the April-June quarter, according to the economy tracker Markit. It said the euro zone is “enjoying its best calendar quarter for three years”, adding that companies across sectors hired staff at the “fastest rate since September 2011”.
Elizabeth Crofoot, senior economist with the ILC, referred to the pace of American job growth with that in the region.
“In contrast to the rapid drop in US unemployment, joblessness in the Euro Area has begun to edge slowly downward in recent months, falling to its lowest level (11.7 percent) since November 2012,” Crofoot said.
JOB STABILITY
Describing Germany as the “euro zone growth engine”, Eurostat said the country’s employment rose 0.3 percent on the quarter and 0.8 percent on the year.
On the other hand, the scenarios in Portugal and Greece signalled that the region’s troubled periphery was experiencing only a gradual recovery in labour markets.
Portugal, which came out of an international bailout last month, saw job creation dip 0.3 percent on the quarter though jumped 1.8 percent year-on-year, while in in Greece, it rose on the quarter and slowed its annual fall to 0.5 percent from 2.6 percent in the last quarter of 2013.
On the flip side, 18.7 million people were without jobs in April despite four consecutive quarters of economic growth, with the jobless rate remaining close to record highest seen last year.
The number of people employed increased by 0.1 percent in the 18-member euro area and by 0.2 percent in the 28-country European Union in the first quarter of 2014, compared with the previous quarter, Eurostat said.
According to its national accounts estimates, employment also increased by 0.1 percent in the euro area and by 0.2 percent in the European Union in the fourth quarter of 2013. These figures are seasonally adjusted.
Moreover, Eurostat said that compared with the same quarter of the previous year, employment increased by 0.2 percent in the euro area and by 0.7 percent in the European Union in the first quarter this year.
It had fallen 0.4 percent and 0.0 percent respectively in the fourth quarter of 2013.
According to Eurostat estimates, 224.2 million men and women were employed in the European Union, of which 146.1 million were in the euro area, in the first quarter of 2014. These figures are seasonally adjusted.
These quarterly data on employment provide a picture of labour input consistent with the output and income measure of national accounts.
APRIL SCENE
According to The Conference Board, the unemployment rate in Germany has steadily inched down from 8.0 percent in August 2009 to 5.2 percent this April. Employment increased in the Netherlands and Australia, and remained stable in the US and Germany, it said.
Despite steady unemployment rates in France (9.8 percent) and Japan (3.2 percent), the employment sector experienced the largest declines in these countries.
Similarly in the US, a sharp decline in April unemployment did not translate into increased job opportunities, emphasizing the role of discouraged workers and retiring baby boomers in bringing the American unemployment rate down.
April employment also declined in Sweden, Canada and Italy, the Board said.
“The absence of sustained job growth outside of Germany poses a challenge for continued labour market recovery in the region,” Conference Board analyst Crofoot said.
BEST QUARTER
Referring to the current April-June quarter, Markit said the euro zone is “enjoying its best calendar quarter for three years.”
According to the economy tracker, the latest reading of its Eurozone PMI – a reflection of the region’s manufacturing and service sectors – was the “second-strongest” seen over the past three years.
“Companies across both sectors nevertheless expanded capacity to meet rising demand, collectively taking on staff at the fastest rate since September 2011,” the Markit survey report on May said.
Manufacturers boosted their employment numbers for a fifth straight month, although to a lesser extent than the recent peak seen in April, while services providers raised their payroll count for a second straight month. “However, in both cases, the rates of job creation remained modest,” Markit said.The cautious approach to hiring in part reflects the fact that, although rising, demand remains weak by the survey’s historical standards, and that growth of sales was often only achieved by further discounting.
Average prices charged continued to fall in May, declining at an identical rate to April though a marginal increase in manufacturers’ selling prices was recorded, which was offset by the steepest decline in rates charged for services since November.
By country, robust growth in Germany again contrasted with a disappointing performance in France. An ongoing robust expansion of output meant the region’s largest member state continued to enjoy its best spell of growth for three years.
Order book growth also accelerated, prompting German firms to take on staff at the fastest rate since December 2011. Faster activity growth in Germany’s service sector contrasted with a slowdown in manufacturing.
While Germany enjoyed strong growth, business activity in France fell back into decline, albeit only marginally, contrasting with the modest return to growth seen in the prior two months.
French firms consequently cut staffing numbers to the greatest extent for three months, and cut average selling prices at the steepest rate for ten months, it said.
“Of greatest concern is France, living up to its moniker of ‘sick man of Europe’ by sliding back into contraction,” said Chris Williamson, chief economist at Markit. “Germany continues to enjoy robust growth and the rest of the region experiences its best expansion since mid-2007.”