Euro zone employment rose a touch more than expected in the last quarter and the economy expanded at a respectable pace, keeping alive hopes for a soft landing after more than a year of near-stagnation, fresh data showed on Thursday.
Employment in the 20-nation euro zone grew by 0.2 per cent on the quarter, twice as fast as predicted in a Reuters poll of economists, pushing up the annual growth rate to 1.0 per cent from 0.9 per cent three months earlier.
While employment growth remains relatively weak, the figures may still ease fears that a downturn in the jobs market could drag the bloc into recession, especially given weak external demand and the poor performance of industry.
Indeed, the overall euro zone economy grew by 0.4 per cent in the third quarter from the previous three months, Eurostat said, confirming its earlier flash estimate, which was twice as fast as economists expected.
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Firms have been holding on to workers despite weak growth, fearing that hiring them back during an upturn would be just as difficult as finding qualified labour in the post pandemic period.
But high interest rates, shrinking corporate margins, an industrial recession and anaemic private consumption are all adding to the negative newsflow, which could convince businesses that holding on to excess labour is not worth the costs.
However, hard indicators like Thursday’s data or an earlier figure showing the unemployment rate holding at a record low 6.3 per cent in September dispute this narrative and confirm that the labour market remains tight.
Meanwhile, euro zone industrial production fell more than expected in September with Germany suffering the biggest fall among the bloc’s largest nations, indicating a long-expected recovery could be even further delayed.
Industrial production fell by 2.0 per cent compared to the previous month, exceeding a 1.4 per cent drop seen in a Reuters poll of economists, even as the previous month’s solid 1.8 per cent growth figure was revised down to just 1.5 per cent, data from Eurostat showed.
Compared to the same month a year earlier, output was down 2.8 per cent, underperforming a 2.0 per cent drop seen by economists and suggesting that a more than year-long industrial recession is still deepening.
Output in Germany, the 20-nation bloc’s biggest economy, fell by 2.7 per cent from the previous month but France and Italy also reported declines.
Capital goods output fell by the most but energy production was also down and expansion elsewhere was not enough to offset these drops.
Industrial production rose steadily after the pandemic until the end of 2022 and has been trending down ever since on weak demand from China, the poor performance of the automotive sector and soaring costs on the surge in energy costs.
The figures are likely to support arguments that the bloc’s long-awaited economic recovery is getting even further delayed and any rebound is likely to be shallow because of structural flaws in euro zone economy. Reuters
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