Eurozone unemployment falls in February, Eurostat reveals

Unemployment in the euro-area fell slightly in February compared to the previous month, Eurostat revealed on Monday.

The seasonally-adjusted unemployment rate dropped to 10.3% in February from 10.4% in January, as expected by analysts. January’s rate was revised up from a previous estimate of 10.3%.

Eurostat said it estimated 16.63m men and women in the 19-member euro-area were unemployed in February, down 39,000 compared to January.

In the 28-member European Union, the unemployment rate held at 8.9% in February compared to January. However, the number of jobless fell 59,000 to 21.65m between January and February.

“Looking ahead, survey evidence suggests that the eurozone’s labour market recovery is beginning to slow - the employment indices of both the European Commission Survey and the Composite (manufacturing/services) purchasing managers’ index have both fallen this year,” said Jennifer McKeown, senior European economist at Capital Economics.

“And note that with the unemployment rate still pretty high, wage growth has remained very subdued.”

The annual pace of labour costs growth fell from 1.4% to 1.3% in the fourth quarter, the analyst noted.

McKeown added that producer price inflation data, also released on Monday, revealed a sharper-than-expected decline which confirmed “there is still a lot of deflationary pressure in the pipeline”.

The producer price index fell 4.2% year-on-year in February, compared to a 3% decline in January and analysts’ forecasts for a 4% drop.

“In all, then, today’s data add to evidence that the inflation outlook is very weak and more policy support is still needed,” McKeown said.

The European Central Bank last month announced a surprise package of measures to help bring inflation back towards its target of just below 2%. The central bank expanded its quantitative easing programme and slashed interest rates, the marginal lending facility rate and the deposit facility rate.