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- August decline in eurozone unemployment provides some relief to service sector outlook - ING
August decline in eurozone unemployment provides some relief to service sector outlook - ING
Bert Colijn, a senior eurozone economist at ING, suggests that the unemployment rate provides some relief to the short-term outlook for the eurozone economy as the rate drops to 7.4%.
- "As one of the main drivers of service sector growth, the labour market has taken center stage in predictions about a looming recession. If unemployment continues to come down at a decent pace, this will boost household incomes and in turn fuel domestic demand. In July, the drop of just 24 thousand unemployed people was worrying but in August, the number of unemployed fell by 115 thousand which was the sharpest decline since March. This comes as a relief and gives time to the service sector to continue to grow even though the decline in manufacturing production is worsening.
- Even though the first few accounts of layoffs in manufacturing have been noted, the eurozone labour market continues to see quite significant pressures, despite the material slowdown in GDP growth over the past quarters. Vacancy rates have plateaued, but remain at the highest levels since the start of the series in 2009 and while fewer businesses are reporting that labour is hindering production in comparison to last year, the amount of businesses reporting this is still at historically high levels. This has resulted in modest upward pressure on wages, helping the consumer spending outlook."
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