Eurozone unemployment steady at 12%
Unemployment across the 17-country eurozone held steady in August, in another sign that the region's economy is stabilising following its longest-ever recession.
Eurostat, the EU's statistics office, said that unemployment was unchanged at 12% in August from the previous month. In total, the number of unemployed fell by a modest 5,000 to 19.18 million.
The improvement in the eurozone labour market has come in the wake of the region's emergence from recession. In the second quarter, it posted quarterly economic growth following six straight contractions.
The overall figures mask huge divergences: While Germany has an unemployment rate of 5.2%, Greece and Spain have over a quarter of their potential workforce out of work.
"The eurozone's jobless rate is past its peak for the current economic cycle," said Zach Witton, economist at Moody's Analytics. "However, the unemployment rate will fall only gradually as the weak recovery provides limited support to profit margins, giving companies little incentive to boost hiring."
As usually happens in a recovery, the modest improvement in the labour market has lagged the region's emergence from recession by a few months. The economy grew in the second quarter by a modest quarterly rate of 0.3% after contracting for six straight quarters, its longest recession since the euro was launched in 1999.
Most surveys suggest the eurozone expanded further during the summer months and that the growth will not rely only on Germany, Europe's largest economy. Even Greece, mired in recession for the best part of six years as the global financial crisis morphed into a crippling sovereign debt crisis, is expected to start growing soon.
Hopes for an improvement in the economy were supported by a closely-watched manufacturing survey.
"This is good news for the eurozone but also for the global economy," said Chris Williamson, chief economist at Markit. "The downturn in demand caused by the region's recession and the uncertainty generated by its debt crisis had cast a shadow over economic recoveries across the globe. But we must not get too carried away."
Over the past three years, the eurozone has been the laggard of the world economy as it grappled with a debt crisis that at various times threatened the future of the euro itself. Countries across the region, but mainly in the south, such as Greece, Portugal and Spain, have had to enact tough austerity measures to convince bond market investors that they could get a handle on their public finances. A combination of recession, poor management and expensive bank bailouts had caused public debt to swell in the region.
The problems afflicting the eurozone weighed on sentiment around the world, putting a brake on the global economic recovery. The eurozone, with its population of a little more than 500 million, is a key market for global firms seeking to do business.
Though welcome, few economists think the eurozone's current economic growth is enough to significantly bring down unemployment, particularly among the young. The manufacturing PMI survey, for example, showed companies in the sector were still shedding jobs in September, though at a slower rate than before.