Eurozone unemployment steady but retail sales rebound

Government employment office in Madrid The unemployment picture is still mixed across the eurozone

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The eurozone's unemployment rate remained stable at 12.1% in November, but retail sales in the area rebounded strongly, latest figures show.

Some 19.2 million people were out of work in the 17 countries using the euro, according to the EU statistics office, Eurostat.

But retail trade in the currency area went up by 1.4% month-on-month, the biggest rise since November 2001, led by booming sales of non-food products.

That came after a 0.4% fall in October.

Analysis

So the eurozone's unemployment rate is not getting any worse. That is consistent with the emerging picture of the region's economy gradually, painfully turning a corner.

It is often the case that unemployment responds slowly at the early stages of a recovery. Firms can meet increased demand with the workers they already have, staff that they chose to hang on to during the downturn - a phenomenon known as labour hoarding.

The increased retail sales are also in line with the eurozone's recovery story. But it bears repeating that it is not a convincing rebound. That's underlined by very low inflation; 0.8% is the latest figure.

It's an issue for European Central Bank policy makers, who meet tomorrow. Some commentators say the eurozone could be facing deflation or falling prices. If that happened it could aggravate the debt problems that many eurozone governments are struggling to conquer.

The eurozone jobless rate has now been unchanged at its current record level for eight months in a row.

September's rate was originally given as 12.2%, but this was subsequently revised down.

Unemployment among the under-25s is twice as bad as for the population as a whole. It remained at 24.2% for the second month in a row.

Within the overall jobless rate, there are huge disparities between individual countries. Greece has the worst rate, 27.4%, followed by Spain with 26.7%.

At the other end of the scale, 4.8% of the Austrian workforce is out of a job, while Germany's unemployment rate is 5.2%.

Sales boost

Across the eurozone, sales of non-food products, excluding car fuel, rose by 1.9% month-on-month.

The rise in retail sales was led by Portugal, which saw 3.1% growth.

The two biggest eurozone economies, Germany and France, registered increases of 1.5% and 2.1% respectively.

Howard Archer, chief UK and European economist at IHS Global Insight, described the two sets of figures as "a double dose of encouraging news for eurozone recovery prospects".

He said that "evidence of stabilising eurozone labour markets and November's jump in retail sales" would increase pressure on the European Central Bank to cut interest rates, especially with inflation below 1%.

But he added: "We expect the ECB to keep its refinancing rate at 0.25% through to 2015, although it is not inconceivable that it could trim it to 0.1% or even 0.0%."

The ECB holds its latest policy meeting on Thursday.

The latest Eurostat figures do not include Latvia, which was not yet in the eurozone when the figures were compiled.

It became the 18th member of the currency bloc at the start of this month.

Unemployment in the whole 28-nation EU, including non-eurozone countries, was stable at 10.9% in November for the seventh month in a row.

Retail sales across the entire EU went up by 1.2% month-on-month, after a 0.5% decrease in October.

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