Euro Area: Unemployment rate drops in July
Labor market conditions in the common currency block improved in July. The number of unemployed people decreased by 350,000, with the unemployment rate falling to 7.6% in July from 7.8% in June.
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, 17 economies saw their unemployment rate decrease in July, including France, Germany, Italy and Spain. Meanwhile, Austria and Finland saw a stable unemployment rate.
Disparities in the labor market among core and periphery countries persist. Greece (14.6%) and Spain (14.3%) are the economies with the highest unemployment rates. At the other end of the spectrum, the Netherlands (3.1%), Malta (3.3%) and Germany (3.6%) have the lowest unemployment rates.
Commenting on the release, Bert Colijn, senior Euro area economist at ING, stated:
“From here on it gets interesting. Countries are getting closer to ending furlough schemes and we’ll soon find out whether this will result in delayed restructuring and layoffs. If it doesn’t, labour market tightness could turn out to be more structural, which in turn would push wage growth higher. This is a key condition for more structural high inflation. Given the quick declines in unemployment of late, we do expect any unemployment increases after furlough schemes end to be moderate, bar any large economic setbacks, of course.”