Parler Share

Eurozone unemployment rate falls to decade-plus low

Parler Share

LONDON (AP) — Worries are growing that the 19-country eurozone economy is heading toward a recession that could start undoing hard-earned improvements in the labor market.

In a survey of manufacturers that is closely monitored by the European Central Bank in its interest rate deliberations, financial information company IHS Markit found that the sector is contracting for the first time since June 2013.

Its so-called purchasing managers’ index — a broad gauge of activity in manufacturing released Friday — fell to 49.3 points in February from 50.5 the previous month. Anything below 50 indicates a contraction in activity.

That’s a weak reading at a time of growing uncertainty about the progress of U.S-China trade talks, volatility in financial markets and Britain’s impending exit from the European Union. Growth has faded recently in the eurozone — in the final quarter of 2018, the bloc grew only 0.2 percent from the previous three-month period.

The slowdown in manufacturing is a sign that global trade is on the wane amid a tariff war between the U.S. and China. Export-reliant Germany was at the forefront of the survey’s decline, with Italy disappointing as well.

Biden Issues First Veto as President - This Is How It Impacts You

“Euro area manufacturing is in its deepest downturn for almost six years, with forward-looking indicators suggesting risks are tilted further to the downside as we move into spring,” said Chris Williamson, chief business economist at IHS Markit.

“In addition to widespread trade war worries, often linked to U.S. tariffs, and concerns regarding the outlook for the global economy, companies report that heightened political uncertainty, including Brexit, is hitting demand.”

Analysts warned that the hit to manufacturing could soon end a long-running drop in unemployment. Official figures released Friday show that unemployment across the single currency bloc is at its lowest rate since the global financial crisis.

Eurostat said the jobless rate fell to 7.8 percent in January, unchanged from the December rate, which was downwardly revised from the previous 7.9 percent. The rate is the lowest since October 2008.

The agency said 23,000 people left the ranks of the unemployed during the month, taking the total down to 12.85 million.

Separately, Eurostat found that inflation edged higher during February as a result of a slight pick-up in energy costs. Consumer prices rose 1.5 percent from the year before, against 1.4 percent in January.

However, the core rate, which strips out volatile items such as energy, fell, to 1 percent from 1.1 percent.

The fall in the core rate is likely to weigh on policymakers at the European Central Bank ahead of their next meeting Thursday. The bank, which aims for a headline inflation rate of just below 2 percent, is mulling when to start raising interest rates, having brought an end to its bond-buying stimulus. Its main rate stands at zero and many policymakers want to lift borrowing rates back to more normal levels when possible.

“Today’s drop in core inflation adds to the ECB’s wall of worries of seeing near-term growth and inflation outlooks being weaker than expected, thus delaying monetary policy normalization and even possibly to require additional support,” said Daniela Ordonez, lead European economist at Oxford Economics.

The Western Journal has not reviewed this Associated Press story prior to publication. Therefore, it may contain editorial bias or may in some other way not meet our normal editorial standards. It is provided to our readers as a service from The Western Journal.

Truth and Accuracy

Submit a Correction →

We are committed to truth and accuracy in all of our journalism. Read our editorial standards.

Parler Share
The Associated Press is an independent, not-for-profit news cooperative headquartered in New York City. Their teams in over 100 countries tell the world’s stories, from breaking news to investigative reporting. They provide content and services to help engage audiences worldwide, working with companies of all types, from broadcasters to brands. Photo credit: @AP on Twitter
The Associated Press was the first private sector organization in the U.S. to operate on a national scale. Over the past 170 years, they have been first to inform the world of many of history's most important moments, from the assassination of Abraham Lincoln and the bombing of Pearl Harbor to the fall of the Shah of Iran and the death of Pope John Paul.

Today, they operate in 263 locations in more than 100 countries relaying breaking news, covering war and conflict and producing enterprise reports that tell the world's stories.
New York City