EMU Unemployment Falls

The rate of unemployment in the EMU fell to 11.5% in June from 11.6% in May. For the EU area the rate fell by one tenth of one percentage point as well to 10.2%. The gap between the highest (24.5%) and the lowest (5%) unemployment rate in the EMU is 19.5 percentage points and both of those at the extremes are large countries: Germany and Spain.

In the EU the unemployment rate has fallen by 0.7% points over the last 12 months, faster than the 0.5% point drop in the EMU. The drop in terms of the raw number of unemployed is down by 5.8% in the EU compared to being lower by 4.1% in the EMU.

In June the monthly unemployment rate fell in Italy, Spain, Ireland, Portugal and the Netherlands. The unemployment rate rose month-to-month in Austria, Finland and France. The Mediterranean countries are showing continuing progress. In Italy the unemployment rate fell from 12.6% in May to 12.3% in June. Spain, Portugal and the Netherlands each saw drops of two-tenths of one percentage point. Ireland's unemployment rate fell by one tenth in June.

Over 12 months the greatest progress in reducing the rate of unemployment is being made by Portugal whose unemployment rate is lower by 2.5 percentage points. That progress is followed by Ireland and Spain with Ireland down by 1.8 percentage points and Spain lower by 1.7 percentage points.

Outside of the EMU, the U.S. and the U.K. each have unemployment rates lower by more than one percentage point over the past 12 months (U.K. data on a lagging basis).

The progress on unemployment reduction in the EMU is better than expected. But it's also true that the progress is mostly being made in the peripheral countries. France continues to lag as its unemployment rate rose in June.

The countries with unemployment backtracking in June, Finland, Austria and France all have been struggling in recent months and the unemployment setbacks are no surprise.

Today, the EMU HICP data were released and they show inflation rising by 0.4% year-over-year; the weakest results since the financial crisis. An inflation rate that low flirts with deflation. Of course, the European Central Bank has its program in place to stimulate lending. But this drop in the overall inflation rate underscores the difficult environment in which the ECB is operating. On the other hand, today's unemployment report was an unexpected surprise as the overall EMU rate of unemployment dropped. Still, recent economic reports have been uneven. There is not much sense of momentum in the euro area at this time. And growth is still badly needed.