RTTN:Eurozone Unemployment Falls For First Time Since 2011
Unemployment in the euro area dropped in June for the first time since April 2011, adding to the list of positive data coming from the region. Still, the rate of unemployment remains at record high.
Further, inflation held steady below the European Central Bank's target, favoring the low interest rate regime for an extended period of time.
The number of unemployed decreased by 24,000 to 19.27 million in June. Compared with June 2012, people out of work rose by 1.129 million, data from Eurostat showed Wednesday.
Despite a fall in the jobless total, the unemployment rate remained stable at a record 12.1 percent in June. The statistical office revised May's jobless rate to 12.1 percent from 12.2 percent estimated on July 2. Economists had forecast a rate of 12.2 percent for June.
In the EU27, the number of unemployed decreased by 32,000 to 26.424 million, that represents 10.9 percent of labor force.
The lowest rates were seen in Austria, Germany and Luxembourg. Meanwhile, Greece reported the highest rate, followed by Spain.
Unemployment in Germany decreased for a second month, down 7,000 in July, and the rate stood at a two-decade low of 6.8 percent, the Federal Labor Agency said today.
A preliminary report from Eurostat showed that inflation has stayed within the central bank's target of 'below but close to 2 percent' since February. It held steady at 1.6 percent in July after accelerating for two months. Today's rate also matched economists' expectations.
At the same time, core inflation slowed moderately to 1.1 percent from 1.2 percent in the previous month. The final report is due on August 16.
The cost of food, alcohol and tobacco grew by 3.5 percent and energy prices advanced 1.6 percent. Prices of non-energy industrial goods rose merely by 0.4 percent.
IHS Global Insight's Chief European Economist Howard Archer says inflation data reinforces the belief that underlying inflationary pressures remain well contained. He expects inflation to hover around 1.5 percent for some time to come.
With unemployment high and inflation pressures weak, there is still a strong case for further policy stimulus in order to sustain the tentative signs of recovery in the region, said Jonathan Loynes, chief European economist at Capital Economics.
The ECB is widely expected to leave its benchmark rate unchanged at record 0.50 percent at its meeting on Thursday.
