Main Article: Europe Labor Market - InvestmentWiki
Unemployment in Europe continues to be low compared to history, despite the weakness in the overall economy. The PMIs surveys do mention that companies are being hesitant to do job cuts due to the recent labor shortage, probably wiling to wait a bit longer in case the economy has a recovery soon.
August 2023, the euro area seasonally-adjusted unemployment rate was 6.4%, down from 6.5% in July 2023 and down from 6.7% in August 2022. The EU unemployment rate was 5.9% in August 2023, down from 6.0% in July 2023 and from 6.1% in August 2022.
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Wage Growth accelerated in Q3 2023, instead of continuing to moderate. Is still near the highs.
https://ec.europa.eu/eurostat/documents/2995521/18133596/3-15122023-BP-EN.pdf/f5a6a8b7-0aca-98ce-2cab-b51e064c726c
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Eurozone unemployment remains at record low levels.
With the economy slightly improving, and unemployment at low levels the ECB won’t be in a hurry to ease significantly either, it seems likely only a few cuts.
Eurostat estimates that 13.149 million persons in the EU, of whom 10.998 million in the euro area, were unemployed in April 2024.
- Compared with March 2024, unemployment decreased by 103 thousand in the EU and by 100 thousand in the euro area
- Compared with April 2023, unemployment increased by 95 thousand in the EU and decreased by 101 thousand in the euro area
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Negotiated wage growth in the Euro Area surged to 5.42% in Q3 2024, the highest increase since Q1 1993, up from 3.54% in Q2.
The figure is unlikely to dash hopes for another ECB rate cut in December. However, policy hawks are likely to use the figures to temper market bets, which see a cut at every policy meeting through the spring, with the 3.25% deposit rate falling to 2% or possibly lower in 2025.
Not expected to create another wave of inflation as of now.
“Our expectation remains that Euro area pay growth will slow noticeably next year as inflation-related catch-up effects fade,” JPMorgan economist Greg Fuzesi said. “As headline inflation is now much lower, nominal wage growth will also reset at lower levels going forward once real wages have recovered sufficiently.”
https://www.reuters.com/markets/europe/euro-zone-negotiated-pay-growth-accelerates-q3-adding-rate-cut-caution-2024-11-20/
https://data.ecb.europa.eu/data/datasets/STS/STS.Q.I9.N.INWR.000000.3.ANR
