Eurozone unemployment falls again in November

Eurozone unemployment fell again in November as the single currency region continued to claw its way back from the impact of the Covid-19 pandemic.

The jobless rate fell to 7.2% in November, according to the European Union’s statistics agency Eurostat, down from 7.3% in October and close to pre-pandemic levels. It is also significantly lower than the 8.1% recorded in 2020.

During November, the number of people unemployed fell by 222,000 in the eurozone, and by 247 000 in the wider EU.

However, 11.8 million people are still unemployed in the eurozone, and nearly 14m in the EU.

“Overall, the fall means that EZ unemployment is now below its pre-virus level—not counting the drop to 7.1% in March, due mainly to a plunge in participation—and we think it will decline further in the next six-to-12 months,” said Claus Vistesen chief eurozone economist at Pantheon Macroeconomics.

“Granted, the distortions from furlough schemes and shifts in labour force participation remain wildcards, but at this point we see clear enough evidence in the raw numbers to suggest that the improvement is real.”

“As far as Omicron is concerned, we think it will be a speed bump, at worst. The obvious next question is whether this positive trend in unemployment will drive up core inflation and wages in 2022, threatening a quicker than anticipated withdrawal of stimulus by the ECB?”

“It’s certainly a possibility, but so far we’ve seen few signs in wage data to suggest that a wage-price spiral is imminent. We will be watching the negotiated wage growth data closely in H1-22.”