The eurozone jobless rate remained steady in May, indicating that the economic recovery isn’t yet strong enough to remove the unused capacity in the labor market.
The unemployment rate stood at 11.6 percent, reported the Luxembourg-based EU statistics office on Tuesday. Another set of data showed that manufacturing activity in the economic bloc declined more than expected in June, according to Markit Economics. Nonetheless, while it shrank for the second straight month in France, it accelerated the most since 2007 in Spain.
The European Central Bank rolled out policies such as negative deposit rate and injecting further liquidity into the banking system to stimulate lending and consequently boost growth.
Unemployment in Germany also surprisingly grew for the second consecutive month as Europe’s biggest economy slows down. The number of persons with no jobs increased by 9,000 to 2.916 million in June, reported the Federal Labor Agency.
Economists surveyed by Bloomberg News had expected the jobless numbers to reduce by 10,000. The adjusted unemployment rate remained unchanged at 6.7 percent, the weakest level in over two decades.
“There may be a bit of a slowdown but Germany’s economy is still growing and very solid,” Ulrike Kastens, a Cologne-based senior economist at Sal. Oppenheim Group told Bloomberg. “Unemployment is low and while there could be a slight increase of the number of people out of work in the coming months we don’t expect a significant deterioration of the labor market in general.”
While Germany has been the most resilient economy in the euro zone, the ZEW investor confidence fell for the sixth straight month while business confidence touched the lowest level in June. The Bundesbank signaled in June that the unprecedented warm weather in the winter may have bolstered economic growth in the first quarter, and hence growth will slow down in the April-June quarter.
Germany’s economy grew by 0.8 percent in the first quarter of 2014, two times faster than the final quarter of 2013. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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