Eurozone economy gains steam with lowest unemployment in decade

Robyn Ryan
August 1, 2017

According to Eurostat, inflation was at 1.3 percent year-on-year this month, the same level as in June.

The euro hit more than 2-1/2-year peaks against the dollar earlier in the session on month-end buying and euro zone inflation data that kept expectations for a more hawkish European Central Bank alive.

Among the Member States, the lowest unemployment rates in June were recorded in the Czech Republic (2,9%), Germany (3.8%) and Malta (4.1%). Today's figures are based on the flash preliminary estimates from Eurostat, with a more detailed release due on August 16.

The euro is trading at levels not seen since January 2015 and has posted its best run in five years as dollar weakens and the euro zone economy starts to gradually improve.

Meanwhile, the US dollar was wallowing near 14-month lows against a currency basket after falling for a fifth consecutive month in July in what is its longest losing streak since 2011. The ECB has so far moved very cautiously in toning down its easing bias, refusing to drop its pledge to increase the size of its asset purchases if needed in its forward guidance at the July policy meeting.

The lowest rate was 6.7% in Germany and the highest 45.5% in Greece.

"The global economy has been a jumbo jet running on just one engine for the last five, six years, the US, but now it seems there's more from the euro zone as well, with encouraging signs from Asia too", said James Knightley, chief worldwide economist at ING.

Consumer prices rose at an annual pace of 1.3pc in July, unchanged from the previous month, Eurostat reported yesterday. "They need to get a clear story for September or October to make the case of the exit and it's not going to be easy because core inflation and wages will probably roughly be where they are now", said Nick Kounis, an economist at ABN Amro in Amsterdam.

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