Eurozone unemployment rate hits record low

According to Eurostat, the European Union’s statistical office, the seasonally-adjusted unemployment rate in the Eurozone was 7.0% in December, down from a revised 7.1% in November and 8.2% in December 2020.

It is the lowest rate on record since measurements started in April 1998.

In the wider EU, the rate was 6.4%, compared to 6.5% a month previously and 7.5% a year earlier.

A total of 13.612m adults in the EU, 11.481m of whom are in the Eurozone, were unemployed in December, according to Eurostat estimates.

Among individual member states, the seasonally-adjusted unemployment rate in Germany was 3.2%, compared to 4.0% in December 2020; in Spain it was 13.0%, down on December 2020’s rate of 16.3%; in France it was 7.4%; and in Italy it was 9.0%.

Germany’s Labour Office also released unemployment data on Tuesday. It said that on a seasonally-unadjusted basis the unemployment rate was 5.1%, the fourth consecutive month it has declined and below expectations for 5.2%.

The number of unemployed fell by 48,000 to 2.345m, the lowest since March 2020. Analysts had only been looking for a fall of around 6,000.

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said of the German figures: "These data are very encouraging. They clearly indicate that firms have decided to look through the near-term hit to economic activity from Omicron, opting to continue hiring for better times ahead.

"A slowdown in the rate of job creation is still likely in the short term…and over time this rate of decline in claims won’t be sustained. That said, a 48,000 slide in jobless claims is punchy on the back of a quarter where GDP fell by 0.7%."

Looking to the wider bloc, he added: "The number of people out of work in the Eurozone fell by 185,000 in December, extending the decline from November’s 287,000 drop. This was enough to pull the jobless rate down to a new record low. Indeed, the rate is now roughly below its past trough, 7.1% in March 2020.

"We look for the Eurozone unemployment rate to decline further over the next six-t0-12 months."

Carsen Brzeski, global head of macro at ING, said: "This strong performance is thanks to furlough scheme support and rapid demand recovery.

"Except for the Netherlands, all Eurozone economies saw unemployment rates dropping or at least remaining constant in December. Still, there are significant differences across the Eurozone, with unemployment rates ranging from 3.2% in Germany to 13% in Spain.

"Demand for workers remains strong, resulting in vacancy rates breaking pre-pandemic highs."