Eurozone unemployment rate holds steady at lowest since Dec 2008

Eurozone unemployment held steady at its lowest level since December 2008 in January, according to figures released by Eurostat on Thursday.

The unemployment was stable at 8.6% in January, with December’s level revised down to 8.6% from the 8.7% previously estimated. In January 2017, the unemployment rate stood at 9.6%.

The number of unemployed people in the eurozone slipped to 14.11m in January from 14.12m the month before.

Meanwhile, in the EU-28 group of nations, the unemployment rate was steady at 7.3% in January compared to December 2017 and down from 8.1% in January last year. This remains the lowest rate recorded in the EU-28 since October 2008.

The lowest unemployment rates in January were recorded in the Czech Republic, Malta and Germany, while the highest rates were seen in Greece and Spain.

Jessica Hinds, European economist at Capital Economics, said that while the data marks a positive start to 2018 which she expects to continue, the improvement in labour market conditions seems likely to prompt only a modest pick-up in wage growth.

"There are still big disparities between countries - Germany’s rate stood at 3.6% while Spain’s rate was 16.3%. France’s unemployment rate was stable at 9.0%. And rather disappointingly, Italy’s unemployment rate edged back up from 10.9% in December to 11.1%.

"Looking ahead, surveys of firms’ hiring intentions suggest that annual employment growth will pick up from Q3’s 1.7% to about 2.0%. This bodes well for further falls in unemployment, which on past form would point to a pick-up in wage growth. But the degree of labour market slack in many member states suggests that aggregate euro-zone wage growth is likely to remain fairly slow. As a result, while we expect the ECB to do away with the loosening bias in its forward guidance next week, we think that it will stress that interest rate rises remain some way off."