Eurozone unemployment falls to below pre-pandemic levels

Unemployment rates in the euro area and the European Union (EU) declined in August, according to fresh data published by Eurostat on Monday.

The eurozone experienced a decrease in its unemployment rate to 6.4%, a drop from 6.5% in July 2023 and 6.7% in August last year.

Similarly, the EU's unemployment rate fell to 5.9% in August, down from 6.0% in the preceding month and 6.1% a year earlier.

There were 12.837 million unemployed people in the EU, and 10.856 million of those were in the euro area.

From July to August, the EU saw a decrease of 112,000 unemployed, and the euro area experienced a reduction of 107,000.

Year-on-year figures revealed that unemployment fell by 335,000 in the EU and 407,000 in the euro area since August 2022.

“The number of people out of work in the eurozone fell by 107,000 in August, after rising by a bigger-than-previously thought 89,000 in July,” said Melanie Debnono, senior Europe economist at Pantheon Macroeconomics.

“This means that, to August, unemployment fell in each month this year bar two, suggesting that resilience remains the name of the game in the labour market, in the face of slowing economic activity.”

Debono noted that there were 10.9 million people unemployed in the eurozone midway through the third quarter - 1.3 million less than before the Covid-19 pandemic and 0.5 million less than before Russia invaded Ukraine and the subsequent energy crisis.

“Among the largest eurozone economies, the jobless rate held steady in Germany, at an upwardly-revised 3.0%, but edged down elsewhere.

“In France, the rate fell 0.1pp to 7.3%, matching the rate in Italy, while in Spain, the unemployment rate was 11.5% in August.”

August’s statistics showed that 2.687 million people under 25 were unemployed in the EU, with 2.194 million residing in the euro area.

The youth unemployment rate remained stable at 14.0% for the EU, while the euro area observed a slight dip to 13.8% from 13.9% in July.

Youth unemployment figures decreased by 10,000 in the EU and 24,000 in the euro area month-on-month.

Compared to August 2022, youth unemployment numbers fell by 141,000 in the EU and 145,000 in the euro area.

Looking at genders, women in the EU faced an unemployment rate of 6.2% in August, unchanged from the previous month. Meanwhile, the unemployment rate for men was 5.7%, consistent with July's figures.

In the euro area, the unemployment rate for women decreased to 6.7% from 6.8% in July, and for men, it declined to 6.1% from 6.2%.

“Looking ahead, we think eurozone unemployment will rise a touch to year-end, as survey data suggest firms have started to shed workers, particularly in manufacturing, and point to private sector activity falling in the third quarter,” Melanie Debono said.

“Admittedly, advance claims-based data from Germany for September, published last week, showed that the claims-based unemployment rate there held steady at the end of the third quarter.

“But leading indicators bode ill; we look for the unemployment rate to rise to around 6.7% by December.”

Reporting by Josh White for Sharecast.com.