Eurozone: Drop in unemployment boosts service sector outlook – ING

Bert Colijn, senior economist at ING, suggests that Eurozone’s latest unemployment rate has provided some relief to the short-term outlook for the Eurozone economy as the rate has dropped to 7.4%.

Key Quotes

“If unemployment continues to come down at a decent pace, this will boost household incomes and in turn fuel domestic demand. In July, the drop of just 24 thousand unemployed people was worrying but in August, the number of unemployed fell by 115 thousand which was the sharpest decline since March. This comes as a relief and gives time to the service sector to continue to grow even though the decline in manufacturing production is worsening.”

“Even though clouds above the labour market outlook are mounting as GDP growth slows, unemployment in August shows that the labour market story is by no means alarming yet.”

“This provides a much-needed breather for the economy, but the question remains how long this can go on as uncertainty spreads across sectors.”