Eurozone unemployment rate dips in May

The eurozone unemployment rate unexpectedly fell in May, according to figures released by Eurostat on Monday.

The unemployment rate dipped to 7.5% from 7.6% in April and 8.3% in May 2018, beating expectations for an unchanged reading and marking the lowest rate recorded in the bloc since July 2008.

In the EU28, meanwhile, the unemployment rate ticked down to 6.3% in May from 6.4% the previous month and 6.9% in May 2018. This marked the lowest rate recorded since the start of the EU monthly unemployment series in January 2000.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said this was "a great and slightly surprising headline, given the small increase in the headline national German jobless rate in May".

"That said, Eurostat and German statistical office report two different numbers calculated using different methodologies - Eurostat uses the ILO definition and Germany uses the domestic claims data - so the trend in the two is not always comparable.

"In any case, unemployment in Germany and France were unchanged at cyclical lows, 3.1% and 8.6% respectively, while falling joblessness in Italy and Spain, to 9.9% and 13.6% respectively, were the primary drivers of the 0.1pp dip in the eurozone headline. The headline in Ireland also stood out, falling to 4.4% from 4.6% in April.

"In total, these numbers look great, but we fear the good news won’t persist. Especially, the German and Italian data are under threat of a reversal in the next six months given the significant slowdown in their economies in the past six-to-12 months."