By Paul Hannon
The eurozone's unemployment rate fell to its lowest level since mid-2009 in October, boosting hopes for a strengthening of the currency area's modest economic recovery as 2016 draws to a close.
The European Union's statistics agency Thursday said the unemployment rate across the 19 countries that use the euro fell to 9.8% from 9.9% in September, having lowered its estimate for the earlier month from 10.0%. That left the jobless rate at its lowest since July 2009. The number of people without work fell by 178,000 from September.
The eurozone's unemployment rate peaked at 12.1% between April and June 2013, just as the currency area returned to growth.
The decline in unemployment is a boost for the eurozone's growth prospects, but leaves the currency area with a jobless rate that is twice that of the U.S.
The larger-than-expected fall in unemployment is in line with other signs that the eurozone's economy is gaining momentum, and comes as policy makers at the European Central Bank prepare for a Dec. 8 meeting at which they will decide whether to extend a bond-buying program due to expire in March.
The drop in unemployment is likely to have continued in November, with a survey of purchasing managers at manufacturing firms that was released Wednesday recording additional hiring at a pace that was just below October's 5 1/2 -year high.
However, the unemployment rate remains well above the 8.8% average of the 10 years before the 2008 financial crisis, and there are few signs of a pickup in wages that would boost inflation toward the ECB's target.
"While wage growth may pick up in the coming months from Q2's weak annual rate of 1.0%, it is unlikely to rise sharply and wage developments will remain consistent with only slow inflation," said Daniel Christen, an economist at Capital Economics.
The drop in unemployment was led by France and Italy.
The fall in Italy's unemployment rate is unlikely to provide a boost to Prime Minister Matteo Renzi's government ahead of a crucial referendum on Dec. 4. While the unemployment rate edged down in October to 11.6%, from 11.7% a month earlier, the drop was mainly due to people leaving the labor market, rather than new jobs being created.
Write to Paul Hannon at email@example.com
(END) Dow Jones Newswires
December 01, 2016 09:03 ET (14:03 GMT)
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