However, a flash estimate suggests Euro zone economic growth could be easing and impact hiring, reports Team IFM
Brussels, July 8: The joblessness situation in Europe continues to be stable as Euro zone economic growth slowed for a second month running in June, easing to the weakest since December, according to an official report of the regional data collection office and the flash reading of an independent economy tracker.
In a report released on July 1, the Eurostat, the European Union’s statistics office, said the seasonally adjusted unemployment rate in the 18-member Euro zone was 11.6 percent in May, “stable” compared with the month before, but down from 12 percent when compared to the year-ago situation.
In the bigger 28-nation European Union (EU28), however, the unemployment rate was shrinking both on a monthly and an annualised basis; at 10.3 percent in the month under review, it was down slightly from 10.4 percent in April, and a wider 10.9 percent in May 2013, Eurostat said.
The latest data is in tune with Eurostat’s latest quarter-wise job situation report, which said employment in the Euro zone had risen for the second consecutive quarter in the first three months of the current year.
“In a sign that the recovery is 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 year on year, the first annual rise since the third quarter of 2011.
The employment trend in the April-June quarter, according to the economy tracker Markit, was also on the upswing. It said the Euro zone enjoyed its “best calendar quarter for three years”, adding that companies across sectors hired staff at the “fastest rate since September 2011”.
According to Markit, the April-June reading of the Euro zone PMI – a reflection of the region’s manufacturing and service sectors – was the “second-strongest” seen over the past three years, leading to swelling labour pools.
“Companies across both sectors nevertheless expanded capacity to meet rising demand, collectively taking on staff at the fastest rate since September 2011,” its survey report for the period said.
However, the situation could be easing. In its regional flash estimate for June released earlier this week, Markit noted that the economic growth in Euro zone had slowed for a second month running, which led to hiring slowing to a “modest” pace in the month under review.
EUROSTAT DATA
In its latest estimates, Eurostat reckons that 25.18 million men and women in the EU28, of whom 18.55 million are in the Euro area, were unemployed in May.
Compared with April, it said that the number of people unemployed decreased by 63,000 in the EU28 and by 28,000 in the Euro area. Compared with May 2013, unemployment fell by 1.36 million in the EU28 and by 636,000 in the Euro area.
Among the member states, the lowest unemployment rates were recorded in Austria (4.7 percent), Germany (5.1 percent) and Malta (5.7 percent), and the highest in Greece (26.8 percent in March 2014) and Spain (25.1 percent).
“Compared with a year ago, the unemployment rate fell in 21 member states, increased in six and remained stable in Austria,” Eurostat said.
The largest decreases were registered in Hungary (10.5 percent to 7.9 percent between April 2013 and April 2014), Portugal (16.9 percent to 14.3 percent) and Ireland (13.9 percent to 12.0 percent), and the highest increases in Luxembourg (5.8 percent to 6.3 percent), Italy (12.1 percent to 12.6 percent), Finland (8.1 percent to 8.5 percent) and the Netherlands (6.6 percent to 7 percent).
In a comparative analysis, Eurostat said the unemployment rate in the US in May was 6.3 percent, “stable” compared with the preceding month and down from 7.5 percent in May 2013.
It also said that in May, 5.18 million young people, or those under the age of 25 years, were unemployed in the EU28, of whom 3.36 million were in the Euro area. Compared with May 2013, youth unemployment decreased by 464,000 in the EU28 and by 205,000 in the Euro area.
Percentage-wise, Eurostat said joblessness had eased slightly to 22.2 percent in the EU28 and 23.3 percent in the Euro area in May this year, compared with 23.6 percent and 23.9 percent respectively in the year-ago period.
The lowest rates were observed in Germany (7.8 percent), Austria (8.9 percent) and the Netherlands (10.8 percent), and were the highest in Greece (57.7 percent in March 2014), Spain (54 percent) and Croatia (48.7 percent in the first quarter of 2014).
The Euro area includes the four bigger economies in the European continent – Germany, Spain, France and Italy – while the EU28 includes the United Kingdom.
JUNE SLOWDOWN
Meanwhile, Markit said that data it collected over June 12-20 showed that economic growth in the Euro zone slowed for a second month running in June, “easing to the weakest since December”, which had an impact on hiring.
According to its flash reading of the Euro zone PMI, growth remained robust in Germany despite weakening slightly, while France’s downturn deepened. Elsewhere across the region, however, growth was the strongest since August 2007, it said.
The headline index covering output of both manufacturing and services fell from 53.5 in May to 52.8 in the month under review, dropping further from April’s 35-month high.
Despite the slowdown, the average PMI reading for the second quarter as a whole was the highest since the second quarter of 2011. Output rose for 12 consecutive months, and at identical rates in manufacturing and services, though the rates of growth slowed in both cases to nine- and three-month lows.
“Firms took on more staff in order to boost capacity in line with the ongoing growth in activity,” Markit said. “That said, rates of job creation in both manufacturing and services remained similar to the very modest rates seen in April and May.”
For Chris Williamson, Chief Economist at Markit, though the June PMI “rounded off the strongest quarter for three years”, and growth outside of France and Germany accelerated, the area of concern was the second consecutive monthly fall in the index. “(This) signals that the Euro zone recovery is losing momentum,” he said.
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