Euro-area unemployment unexpectedly retreated from a record, as the currency bloc’s economic recovery gained momentum.
The jobless rate fell to a revised 12 percent in July from a record 12.1 percent a month earlier, and held at that level in August, the European Union’s statistics office in Luxembourg said today. Economists forecast a rate of 12.1 percent, according to the median of 30 estimates in a Bloomberg News survey. (UMRTEMU) Unemployment among young people fell to 23.7 percent in August after two months at 23.8 percent.
Today’s report comes after the 17-nation euro economy emerged from its longest-ever recession in the second quarter and economic confidence rose for a fifth month in September. At the same time, economists surveyed by Bloomberg predict the jobless rate will peak at 12.3 percent by the end of this year before falling to 12 percent by 2015.
“Since the labor market tends to react to changes in economic conditions with a bit of a lag, the health of the employment outlook may continue to improve over the coming months,” said Ben May, an economist at Capital Economics Ltd. in London.
The euro extended gains against the dollar after the data were released, trading at $1.3558 at 11:30 a.m. in Brussels, up 0.2 percent on the day.
Unemployment in Germany, Europe’s largest economy, held at 5.2 percent in August, today’s report showed. The jobless rates in France and Spain remained at 11 percent and 26.2 percent, respectively, while in Italy the rate increased to 12.2 percent.
A robust German job market and the economic strength of Europe’s largest economy in the midst of the region’s debt crisis helped Chancellor Angela Merkel’s Christian Democrats take the largest share of the vote in a Sept. 22 election.
Deutsche Lufthansa AG (LHA), the Cologne, Germany-based airline, said last month that it will hire 500 employees in 2014 on contracts that expire after two years, with a one-time option to extend them.
The euro-area economy grew 0.3 percent in the three months through June, and European Central Bank President Mario Draghi said last month that he expects the pace of the economy to remain “modest.” The Frankfurt-based central bank predicts the economy will shrink 0.4 percent this year before growing 1 percent in 2014.
ECB policy makers gather in Paris tomorrow for their monthly rate decision meeting.
Siemens AG (SIE), Europe’s largest engineering company, will eliminate 15,000 jobs, the Munich-based corporation said on Sept. 29. It initially planned some 8,000 cuts globally, a person familiar with the program told Bloomberg News last year.
“There are some signs of stabilization in Europe’s periphery, for example in Spain,” said Janet Henry, chief European economist at HSBC in London. “But it will be a long time until we see the euro area’s unemployment rate coming down to anywhere near pre-crisis levels.”
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