Euro Area: Unemployment rate drops in June

Euro Area Unemployment June 2021

Euro Area: Unemployment rate drops in June

Labor market conditions in the common currency block improved in June. The number of unemployed people decreased by 423,000, with the unemployment rate falling to 7.7% in June from 8.0% in May.

That said, short-time work schemes involving a considerable portion of the labor force across the Eurozone have prevented a jump in the unemployment rate.

Looking at countries, 14 economies saw their unemployment rate decrease in June, including France, Italy and Spain. On the flipside, Latvia saw its unemployment rate increase. Meanwhile, four countries saw a stable unemployment rate, including Germany.

Disparities in the labor market among core and periphery countries persist. Greece and Spain are the economies with the highest unemployment rates (15.1%). At the other end of the spectrum, the Netherlands (3.2%), Malta (3.6%) and Germany (3.7%) have the lowest unemployment rates.

Commenting on the release, Bert Colijn, senior Euro area economist at ING, stated:

“Showing that unemployment declined to 7.7% confirms the labour market is getting tighter on reopening. We are cautious about drawing longer term implications from this, because furlough schemes ending and additional slack outside of the labour force could well cause wage growth to remain modest in the recovery phase. But nevertheless we do like to note that the job market improvements so far add to some additional medium-term inflation risk.”

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