Eurozone Unemployment Dropped, Inflation Increased

The Eurozone is a group of 17 nations of the EU that uses the euro as their currency.

The unemployment rate in the Eurozone dropped to 12.1 percent in October coming from 12.2 percent the previous month. This is a milestone of sorts for the 17 nations in the Eurozone, which is suffering from years of economic stagnation. However, the inflation rate increased from 0.7 percent in October to 0.9 percent in November based on reports by Eurostat, the European Union’s (EU) data monitoring and analysis office.

The improvement in the job market prospect means that an estimated 61,000 individuals were able to land a job in the Eurozone, but a not so bright prospect still exists in the non-euro countries of the 28 nation-member EU like Poland, Romania and Britain whose unemployment rate is still fixed at 10.9 percent.

However, a separate Eurozone report with regard to the slight increase of inflation made many observers fear that the group of 17 nations might be in for a disastrous downward price movement. Based on the European Central Bank’s (ECB) 2 percent target, the figure is still well below the mark but is not enough to convince several economists that deflation will not happen. Deflation occurs during economic depression where there is an expansive decline in the prices of goods and services.

According to a senior fellow working at Bruegel, a research organization based in Brussels, Zsolt Darvas, the threat of deflation is still there even if an improvement was observed in the previous month. He added that he is still unconvinced on news of a Eurozone recovery because the basic problems are still there. Darvas cited as examples the banking system in the zone is still not functioning properly, government austerity measures are still the norm, credit is still tight and business investment is still not taking hold of the economy.

The decrease in unemployment in the Eurozone can partly be attributed to the efforts from France as most companies there hired workers, especially the younger set, on a temporary basis. The same is true for Ireland and Portugal where unemployment rates also decreased. In Spain however, the unemployment rate increased from 26.6 percent to 26.7 percent.

Another not-so-surprising event in the Eurozone was the credit downgrade given by Standard and Poor’s (S&P) to the Netherlands from a high of AAA down to AA+. S&P in justifying the drop in rating, mentioned that the Dutch economy is still generally weak given the government’s partiality for sticking to austerity measures and budget cuts. These measures are made worse by falling housing markets and declining consumer confidence. The Dutch economy might even shrink by 1.2 percent by the end of 2013, S&P added.

On the other hand, Cyprus got a B rating coming from a CCC+ rating from S&P which reflected the economic improvement in the country propped mainly by a bailout plan in the amount of 10 billion euro as extended by the EU and from the International Monetary Fund (IMF). Cyprus is slowly recovering from a near economic collapse three years ago.

Tim Congdon of the International Monetary Research said that a “dark cloud” is hanging over the Eurozone in 2014 because the public debt ratios are at greater risk of exploding.  Also, the money growth data fell to 1.4 percent which is lower than the ECB’s 4.5 percent target in order for the Eurozone’s economy to stay afloat. With these mixed signals coming from all fronts, analysts are hard put to place the real score on the economic status of the Eurozone and the EU in general even if some data like the October unemployment rate is down to 12.1%.

By Roberto I. Belda

The Telegraph

The New York Times

news.com.au

We will read your comment immediately so leave a remark!

RSS Guardian Express

  • Autism and the Challenges of Easter April 18, 2014
    For most families living with an autistic loved one, everyday holds certain demands. Holidays, like Easter, provide even further challenges for those with autism. The traditions most people take for granted must be approached from a unique perspective. Zack, who is 11 years old, is moderate to high-functoning on the Autism Spectrum. He loves the […]
    Stacy Lamy
  • Peaches Geldof Funeral Arrangements Shared April 18, 2014
    The funeral arrangements for Peaches Geldof have been shared by her family. It will be a private funeral on Easter Monday (April 21), and will be held in the same church as her mother’s funeral. St. Mary Magdalene and St. Lawrence Church in Davington is also the same church that the 25-year-old socialite married and […]
    Alexandria Ingham
  • Game of Thrones Spoilers Ruining the Experience? April 18, 2014
    Sharing spoilers of Game of Thrones is ruining the experience for some people. They do not want to know what happens in the episodes before they get a chance to see it themselves. The issue reached its peak so far this week after many publications started sharing the events of the “Purple Wedding” just after […]
    Alexandria Ingham
  • Game of Thrones Spoilers Lead to Arguments Online April 18, 2014
    The internet has been surrounded with Game of Thrones spoilers this week that include the death of a certain character, and it has led to arguments online. Many people who have not read the books or seen the episode yet have gotten annoyed at publications for sharing the details of the character’s death, and even […]
    Alexandria Ingham
  • Miley Cyrus Hits Out at Hospital Rumors April 18, 2014
    Miley Cyrus has hit out at rumors suggesting her recent trip to hospital was due to her partying ways. A number of publications decided to jump on the idea that the 21-year-old was out partying in a way to get over the recent death of her dog, Floyd. In a statement, which she linked to […]
    Alexandria Ingham

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 626 other subscribers

Quantcast