Euro-Area Unemployment Drops to 4-Year Low Amid Stimulus Debateby
Region's jobless rate at 10.3%, lowest since August 2011
Unemployment rate shows divergence within the currency bloc
Euro-area unemployment decreased to lowest in more than four years in January, giving European Central Bank policy makers some positive news a week before their monetary policy meeting.
The region’s jobless rate declined to 10.3 percent, the European Union’s statistics office Eurostat in Luxembourg said on Tuesday. That’s the lowest since August 2011 and beats the median economist forecast of the rate holding at 10.4 percent.
National figures published by Eurostat on Tuesday pointed to the divide in the euro region. While German’s unemployment rate stood at 4.3 percent, joblessness in Spain still is at 20.5 percent.
“You can now see the impact of the cyclical recovery in the euro area on the labor market,” said Carsten Brzeski, chief economist at ING-Diba AG in Frankfurt. “But there is still a long way to go to get out of the crisis.”
Tuesday’s figures may provide some comfort to ECB policy makers who are set to gather in Frankfurt on March 9-10. Consumer prices in the 19-nation bloc declined to minus 0.2 percent in February -- the worst reading in a year -- and factories in the region cut prices at the fastest pace in almost three years.
The ECB Governing Council has said it will review whether its current stimulus is enough. Price growth has fallen short of the central bank’s goal of just below 2 percent for three years amid a drop in oil prices, pushing the central bank to take more and more aggressive action in response.
To kick-start a revival in inflation, the ECB has already cut its deposit rate to minus 0.3 percent and is pumping 60 billion euros ($65 billion) a month into the economy via asset purchases. The central bank forecasts euro-area unemployment will fall to 10.1 percent in 2017 from an average 10.5 percent this year.
Finance chiefs from the world’s top economies have committed their governments to doing more to boost global growth. The Group of 20 said it will use fiscal policy flexibly to strengthen growth, job creation and confidence. After a two-day meeting in Shanghai, finance ministers and central bank governors also doubled down on a line from their last gathering that “monetary policy alone cannot lead to balanced growth.”