Euro area unemployment rate remains stable

A small fall in the number of unemployed left the euro-zone unemployment rate unchanged at its seven-and-a-half-year low of 9.6% in January, according to official data published on Thursday.

Eurostat said the rate was stable compared to December and down from 10.4% in January 2016, still the lowest rate recorded in the euro area since May 2009.

For the 28 countries of the entire European Union, the unemployment rate was down to 8.1% from 8.2% in December and 8.9% in January 2016, the lowest EU28 rate since January 2009.

Eurostat estimated a 96,000 decrease to 19.97m in the number of people of working age in the EU28, with a 56,000 decrease to 15.6m in the euro area.

Over the last year unemployment shrank by 1.73m in the EU28 and by 1.1m in the euro area.

In other data from Eurostat on Thursday, February’s increase in headline harmonised consumer price (HICP) inflation rose to 2.0% from 1.8%, in line with the consensus forecast, and creating a new four-year high.

Unemployment, despite major improvements since its peak in 2013 at 12.1%, remains elevated at roughly twice that in the US and the UK, observed economist Florian Hense at Berenberg, and versus its average pre-crisis level of below 8%.

"Wage growth has been moderate – and a recent weak wage deal for the public sector in Germany despite its record high level of employment suggests that this is not going to change materially, let alone in those countries that continue to suffer from slack in their labour market.

"Therefore, second round effects, important for inflation expectations, seem to remain modest for now."