Eurozone Unemployment Rate Declines To 87-Month Low

The Eurozone unemployment rate declined to 9.8% for October from a revised 9.9% for September, which was originally reported as 10.0% and was also lower than the consensus forecast of 10.0% for the month.

This was significantly below the 10.6% rate for October 2015 and the lowest recorded rate since July 2009.

The rate of youth unemployment was unchanged at 20.7% for the month, although this was a decline from 22.2% in October 2015.

As expected, the lowest rate was recorded in Germany at 4.1% with the highest rates at 23.4% in Greece and 19.2% in Spain.

The steady decline in unemployment will underpin short-term confidence in the economic outlook and will also help support near-term trends in consumer spending, especially as consumer confidence has increased to the highest levels of 2016.

There will still be concerns surrounding very high unemployment rates in the weaker economies as structural vulnerabilities continue. There will also be concerns that the ECB will find it increasingly difficult to sustain a very expansionary monetary policy if unemployment rates in Germany decline much further given the risk of overheating, which will cause major concerns within the Bundesbank.

The market reaction was limited, although EUR/USD ticked fractionally higher and held above the 1.0600 level, while equity markets pared losses.

eurounemployment (1)

Tim is a contributing author to He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.