Economy in Brief

Unemployment rates in the European Monetary Union are stationary at 6.4% in July after falling in June to 6.4% from 6.5% in May.

Country level results: Among the twelve European Monetary Union members who report unemployment rates early, individual country unemployment rates fell in Belgium, Spain, Ireland, and Greece in July. Unemployment rates rose in Austria, Finland, France, Italy, and in the Netherlands. Broadly speaking, unemployment rates in the monetary union are trending lower. However, the data for July offer a cautionary tale regarding where trends are headed. At the bottom of the table, we provide reference unemployment rates for the United States, the up-to-date claimant rate of unemployment in the United Kingdom, and the unemployment rate for Japan. The U.K. and Japan both saw elevated unemployment rates in July compared to June. The U.S. rate continued to snake down after having seen a relatively sharp increase in the unemployment rate in May that has since unwound.

Sequential trends Sequential trends for unemployment rates show that for the overall European Monetary Union rate the unemployment rate is down by 0.3 percentage points over 12 months; it's also down by 0.3 percentage points over six months; it is lower by 0.1 percentage points over three months. Trends across countries show declines in the unemployment rate over 12 months, six months and three months for Italy, Ireland, Greece, and Spain. Portugal shows an increase over 12 months, with declines over six months and three months. Other countries show increases on all horizons; those are Austria, Finland, France, and Luxembourg. The Netherlands shows an increase over 12 months and three months, with no change over six months.

Ranking countries by their level of unemployment We can also look at the broad rankings for the unemployment rate. Here we find that all the monetary union countries except Luxembourg and Austria have an unemployment rate that ranks in the lower 50% of its distribution of unemployment rates (on data since 1994) marking them all as below their historic medians on this timeline. Belgium, Germany, France, and Ireland all have unemployment rates that are in the lower 10 percentile of their respective historic queues of unemployment rate observations. These are countries with exceptionally low unemployment rates compared to their own historic standards. Make no mistake: European labor markets are tight! Among the countries with unemployment rates below they're medians but somewhat higher, we have Greece with the 40.7 percentile standing, Spain with a 25.9 percentile standing and Finland with the 22.4 percentile standing. All of these are moderately low to still exceptionally low unemployment rates indicating strong labor market conditions across the monetary union- just about everywhere.

The EU sentiment indexes for the EMU in August fell to 93.3 from 94.5 in July, continuing a steady decline as depicted in the chart. Industrial reading eroded, consumer confidence eroded, construction eroded and services eroded; only the retail reading at -5 was unchanged on a month-to-month basis. The percentile standing with the overall index is at its 24.2 percentile, putting it in the lower quartile of its queue of values. The industrial EMU readings are in the bottom 26-percentile, consumer confidence is in its bottom 19th percentile and services are in the lower 34th percentile of their historic queue. And the two readings stand above their respective medians, retailing at its 62nd percentile reading and construction at its 72nd percentile reading.

Across countries Percentile standings across the monetary union are weak with only three countries Greece, Malta, and Cyprus - all of them small economies- sporting EU index values above their respective historic medians (above a 50-percentiel standing). In August, there are declines in eight of the reporting 18 monetary union members. However, the three largest economies in the monetary union, Germany France, and Italy, each experienced sharp declines in August. Germany posted a decline of 2.6% on the month, France, a decline of 2.7%, and Italy dropped 1.1%. The fourth largest economy in the monetary union, Spain, posted its second monthly increase in a row, rising by 1.5% in August. But among the countries that saw declines, most of them were quite severe declines as we can see in the table below. Portugal saw a drop of 3.4% month-to-month, Austria logged a drop of 4.6%, Malta fell by 4.8%, and Belgium fell by 1.2%. Among all the negative month-to-month values, only Lithuania had a modest decline of 0.2%.