Unemployment in the euro-area, and in the EU, declined in August from the previous month, according to the latest data from Eurostat.
The statistical office for the European Union said Thursday that the euro-area unemployment rate was 7.5%, falling from 7.6% in July - and down from 8.6% in August last year.
EU unemployment stood at 6.8%, down from 6.9% in July – and below the 7.7% reported in August 2020.
As a result, Eurostat estimated that 14.5 million men and women in the EU, of whom 12.2 million were based in the euro area, were jobless in August.
Higher wage growth
Financial analysts at ING said wage growth is set to increase off the back of the unemployment decline.
“The rapid decline in unemployment on the back of reopening economies is extraordinary given the double dip in GDP (gross domestic product) over the course of the pandemic.
“It shows once more that this is no ordinary recession and opens the door to a modest recovery in wage growth as the vacancy rate has already recovered to pre-crisis levels,” the analysts said.
Moreover, the latest data showed that 2.8 million young people (under 25) were unemployed in the EU in August, 2.3 million of whom were in the euro area.
The rate was 16.2% in the EU and 16.4% in the euro-area, down from 16.4% and 16.7% respectively in the previous month.
Compared with August last year, youth unemployment decreased by 508,000 in the EU – and by 471,000 in the euro-area.
Unemployment by gender
Eurostat also published figures by gender, revealing that the unemployment rate for women in August was 7.2% in the EU, down from 7.4% in July 2021. In the euro-area, the unemployment rate for women decreased from 8.1% in July 2021 to 7.9% in August.
The unemployment rate for men in the EU was 6.5% in August 2021, stable compared with July 2021. The euro-area rate remained stable at 7.1% in August 2021.
Looking ahead, data released Thursday morning showed that the national measure of Germany’s unemployment rate held steady in September, but the continued improvement in surveys of firms’ hiring intentions bodes well for the Eurozone reading regardless, Melanie Debono, a senior Europe economist at Pantheon Macroeconomics told Capital.com.
“Past this month, we think that the unemployment rate will continue its decline. Of course, once short-time work schemes, in their current form, are wound down some firms may let workers go to ease pressure on payroll commitments, but we expect the current schemes to be replaced by other longer-run support, so any increase should be limited,” she said.
The current schemes in the big four are slated to end in December in Italy, France and Germany. Spain’s scheme was due to end in September, but it recently extended its scheme to October in its current form and until February 2022, in a less generous format, Debono explained.
“All told, we look for a fall in the EZ (eurozone) unemployment rate to 7.0% by the end of 2021, in contrast to the consensus, and expect it to continue falling, albeit at a more gradual pace next year,” she added.
Michael Tran, an assistant economist at Capital Economics told Capital.com that the fall in eurozone unemployment in August brings the jobless rate back very close to its pre-pandemic level but said employment is still below pre-virus levels, highlighting that the labour market recovery “still has a long way to go” – and said the labour market slack will continue to weigh on wage growth.
The euro area consists of Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.
The European Union includes Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden