The eurozone’s unemployment rate has fallen to its lowest level in four years, while businesses and consumers are more optimistic about their prospects than at any time since April 2011, fresh evidence that the currency area’s modest economic recovery gained momentum as 2015 drew to a close.
The European Union’s statistics agency on Thursday said the jobless rate across the 19 countries that share the euro fell to 10.5% in November from 10.6% in October, reaching its lowest level since October 2011. Economists surveyed by The Wall Street Journal last week had expected the unemployment rate to be unchanged at 10.7%, while the October rate was revised down from that figure.
A separate survey of confidence released by the European Commission found that businesses and consumers became more upbeat in December, despite the terror attacks on Paris during the previous month, and concerns about the impact of a slowdown in China and some other large developing economies.
The commission’s Economic Sentiment Indicator–which aggregates measures of consumer and business confidence–rose to 106.8 from 106.1 in November, further above the 100.0 average reading over the years since 1990.
However, eurozone retail sales fell 0.3% in November from October, a third straight month of decline that underlines the weakness of inflationary pressures in the currency area. While unemployment is falling steadily, if slowly, from its very high levels, wage growth has yet to pick up.
The data releases and surveys add to other recent evidence in suggesting that eurozone economic growth picked up in the final months of 2015. Surveys of purchasing managers released Wednesday pointed to an acceleration of activity in December. The eurozone economy slowed in the three months to September, recording growth of just 0.3% compared with the previous quarter. But economists estimate it may have expanded between 0.4% and 0.5% in the three months to December.
The eurozone’s rebound is a rare piece of positive news for the global economy, although any pickup is likely to be too slight to offset slowdowns in China, Brazil, Russia and other large developing economies. The World Bank Wednesday cut its growth forecast for global growth in 2016 to 2.9% from 3.3%, citing souring prospects in the world’s largest emerging markets.
Across the eurozone, some 130,000 fewer people were unemployed in November compared with October, leaving 16.924 million without jobs. Much of the decline in unemployment again came from Spain and Italy, although there was a also a substantial fall in France. But the eurozone’s unemployment rate remained very high by international standards at more than twice the 5% rate recorded in the U.S. during the same month.
Policy makers had feared the eurozone’s recovery would be slowed or halted by the terror attacks on Paris and security concerns elsewhere in the currency area, largely by making businesses and consumers more cautious and less willing to spend. But the Commission’s survey indicated that the attacks have had little impact, with manufacturers, service providers and construction companies becoming more positive about their prospects. With consumers also gaining in optimism, retailers were alone in feeling more downbeat as the year ended.
But that rise in consumer confidence has yet to translate into a significant increase in spending, with retail sales falling 0.3% in November. Sales in France fell at a sharper pace than in previous months, probably a response to the terror attacks. But sales also fell in Spain and other parts of the currency area.