It is remarkable. Despite all the economic sluggishness and uncertainty in recent years, the eurozone labour market has remained as strong as ever. With unemployment at 6.2%, the domestic economy continues to be supported by historically low unemployment and income stability for Europeans.
As we have previously argued, the strong eurozone job market has been mainly driven by job growth in the south, whereas northern eurozone economies have seen unemployment run up modestly in recent years. In May, the broad pattern was no different as unemployment decreased in Spain, Italy and Portugal, while the rate remained stable in Germany, France, Belgium and the Netherlands. Austria and Finland experienced increases.
The eurozone economy is facing huge uncertainty now, but business surveys about activity and hiring actually don’t look that bad. This makes it likely that unemployment will continue to trend around the current all-time lows. Low unemployment dampens the impact of economic uncertainty on domestic demand, which contributes to our view of continued economic growth in the coming quarters.
