EMU: Unemployment Rate

January 31, 2017 04:00 CST

Consensus Actual Previous
Level 9.7% 9.6% 9.8%

The Eurozone labour market outperformed expectations in December. A hefty 121,000 monthly fall in the number of people out of work was significantly steeper than the 74,000 drop recorded in November and enough to reduce the jobless rate a tick to 9.6 percent, the lowest level since May 2009.

In the main, December's improvement was led by the smaller member states. Amongst the larger countries, the German rate was unchanged at 3.9 percent (still easily the lowest in the region) while Italy was stable at 12.0 percent and France rose a tick to 9.6 percent. Spain (18.4 percent after 18.7 percent) was the only major state to see a decline.

Still, there was slightly better news on youth unemployment which, following a 51,000 gain in November, fell 9,000. This lowered the jobless rate from 21.0 percent to 20.9 percent although this was still 0.3 percentage points above the October outturn.

Ignoring the monthly volatility, Eurozone unemployment has been on a solidly declining trend for more than three years now. More of the same should help to sustain a decent upswing in consumer spending and prompt renewed investment. Both eventualities would help to ensure that the fourth quarter's respectable performance by GDP (see today's calendar entry) is not just a flash in the pan.

The unemployment rate measures the number of unemployed as a percentage of the labor force.

Unemployment data are closely monitored by the financial markets. These data give a comprehensive report on the state of the economy and its future direction. A rising unemployment rate can be a warning sign of hard times while a low rate can be a warning of inflation as wages are bid up to attract labor.

Unemployment data are expressed in both a numerical value and as a percentage of the labor force. Generally, the definition of those unemployed follows that of the International Labour Organisation (ILO). It states that an unemployed person is one between the ages of 15 to 74 years of age who was not employed during the reference week, had actively sought work during the past four weeks and was ready to begin working immediately or within two weeks. The unemployment rate is the percentage of unemployed persons over the total number of active persons in the labor market. Active persons are those who are either employed or unemployed.

Eurostat provides an unemployment rate for each EU country as well as for the EMU and EU as a whole. It should be noted that the unemployment rate for a country will frequently differ with that reported by the national statistics agency. That is because of the varying interpretations of the ILO definition by member states and Eurostat.