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Sancho Panza

Unemployment In Europe Stays High Amid Signs Of Recovery

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NYT 8/1/14

'PARIS — Europe’s labor market remained stagnant in November, official data showed Wednesday, but analysts saw reason for hope elsewhere in the economy, including a surge in retail sales.The unemployment rate in the euro zone remained at 12.1 percent, a stubbornly high level that has held since April, Eurostat, the European Union’s statistics agency, reported from Luxembourg.

The jobless rate was in line with economists’ expectations. It had risen from just under 10 percent in early 2011, as the sovereign debt crisis seized the region, to the current record level.

For the full European Union, made up of 28 member states, the jobless rate was unchanged at 10.9 percent. Eurostat estimated that 26.6 million across Europe were unemployed and seeking work, 19,000 more than in October.

More than five years after the 2008 implosion of Lehman Brothers triggered a global financial collapse, Europe’s economy remains on fragile footing. Lending to businesses is contracting, and investment, not surprisingly, is weak.

There were indications that the labor market may be lagging the broader economy, though, including a separate report from Eurostat showing that euro zone retail sales rose 1.4 percent in November from a month earlier, when they had dropped by 0.4 percent.

In Berlin, the Economy Ministry reported that orders for German factories rebounded by 2.1 percent in November from October, when they suffered a decline of a similar size. That was substantially above market expectations for a rise of about 1.5 percent.

Taken together, the data show “the euro zone economy is growing modestly,” said Christian Schulz, an economist at Berenberg Bank in London. “The labor market is stabilizing and retail sales are rebounding nicely.” That, he said, suggests that “the decline in domestic demand is over.”

There have been other hopeful signs in Europe lately, including a survey of purchasing managers by Markit Economics, which showed output near the highest it has been for two-and-a-half years. And Ireland met strong demand upon its return to the international bond market Tuesday after exiting its bailout. The Irish government sold 3.75 billion euros, or about $5.1 billion, of 10-year bonds priced to yield just 3.543 percent, with more than four-fifths of the demand coming from overseas investors.

Nor is Ireland the only euro zone nation to find the bond market a more hospitable place. At the height of the sovereign debt crisis, officials had feared that Spain and Italy would be forced to seek bailouts because their borrowing costs were becoming unsustainable. But yields on Italian and Spanish government debt have fallen sharply from their peaks, to well below 4 percent — welcome news for countries that will be tapping the market for hundreds of billions of euros for refinancing this year.

Because bond yields move inversely with the price, lower yields signal investors are demanding more of the debt. Even hapless Greece has benefited, with yields on its debt falling below 8 percent to the lowest level in more than three years.

Still, the outlook for economic growth for the region remains anemic.

Richard Barwell, an economist in London with Royal Bank of Scotland, estimated before the jobless data were released that the euro zone’s gross domestic product grew by just 0.2 percent in the fourth quarter of 2013. That would be equivalent to a 0.8 percent annualized rate.

Mr. Barwell forecasts that the euro zone will manage quarterly growth of about 0.3 percent in the first quarter of the new year.

Mr. Schulz said the jobless data revealed that labor markets in Ireland and Portugal, two countries that were battered by the sovereign debt crisis, were improving. The rate declined in Ireland to 12.3 percent from 12.5 percent, and Portugal dipped to 15.5 percent from 15.6 percent.

The rate in Spain, where joblessness has been at depression levels, held steady in November at 26.7 percent, suggesting the country may also be in the early stages of a rebound, he said, citing national data showing jobless registrations falling in DecembeItaly was an important exception, with unemployment rising to 12.7 percent from 12.5 percent.

Among the lowest unemployment rates in Europe were in Austria, with 4.8 percent, and Germany, with 5.2 percent. Greece showed the highest rate, at 27.4 percent, though it is several months behind in its reporting.

The November unemployment rate in the United States was 7 percent.

But the jobless data, and the danger of deflation, will be important topics for discussion in Frankfurt. Consumer prices in the euro zone rose in December at an annual rate of only 0.8 percent, Eurostat reported on Tuesday — far below the E.C.B.'s inflation target of 2 percent.'

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But yields on Italian and Spanish government debt have fallen sharply from their peaks, to well below 4 percent — welcome news for countries that will be tapping the market for hundreds of billions of euros for refinancing this year.

Spain 5 year bond yield = scraping down to 1.73 per cent. LOWER than 5 year US Treasury yield.

FT: ( April 4) - In real terms – adjusting for inflation – Spanish yields are still comfortably higher than US Treasuries. Spain's consumer price index fell into negative territory last month, while the US inflation gauge is at 1.1 per cent.

(Spain’s consumer price index falling.. lower prices.)

Spain sells 5.6 bln euros in bonds, yields drop

Thu Apr 3, 2014 3:12pm IST

(Reuters) - Spain's borrowing costs over five and 15 years fell to record lows on Thursday, demonstrating continued strong demand for Spanish debt backed by growing optimism about the strength of an economic recovery.Spain easily exceeded its target range in a triple-bond auction ahead of a European Central Bank interest rates decision expected to keep borrowing costs unchanged despite deflation risks in the region.

in full: http://in.reuters.co...N0MV26320140403

And it looks like appetites really whetted for buying up debt amongst some of the specialist investment companies in that field.

In the UK, seems there is a mindset that no one is allowed to fail, and there are no new entrants willing to buy failed/failing companies, from the failures....... "supermarkets will shut forever" ... repossessions mean human suffering.... whilst often the same people going on about human-suffering own houses now valued above half-million-pounds, also giving it how "you've got to pay more rent to your landlord if they decide to up it, else landlord will get another tenant." :rolleyes:

Edited by Venger

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If unemployment remains high there is no recovery surely?

What they really mean to say is that boots remain on the ground as bootstraps are pulled very very hard.

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  • 404 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
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