Unemployment fell to 6.6% in May, keeping pressure on wage growth despite the economy showing signs of weakening.

Despite a weakening economy, the labour market continues to outperform. At 6.6%, the eurozone unemployment rate has reached a new low. The widespread increases in employment are cushioning the negative impact of the Ukraine war and inflation on the economy and will therefore soften the blow to GDP in the second quarter and over the course of the summer.

While surveys do show that hiring intentions are slowing at the moment, we don’t see a large turnaround happening in the eurozone labour market. Vacancy rates are at all-time highs and even if the economy were to fall into a mild recession, we expect the impact on unemployment to be modest. With shortages so rampant at the moment, businesses are likely to try to hold onto staff at the start of a downturn to make sure that they don’t have to rehire shortly after. Only if a prolonged or deep slump were to occur, we expect a substantial cooling of the labour market.

At this point, wage pressures from the labour market persist. While substantially higher wages still have to materialise, wage growth is still set to trend markedly higher in the quarters ahead. So while the economy is already slowing significantly, the labour market’s traditional lag keeps the unemployment outlook quite rosy for the coming period.

Read the original analysis: Eurozone unemployment reaches new all-time low despite economic slowdown

Content disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more here: https://think.ing.com/content-disclaimer/

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD pulls away from session highs, stays above 1.0200

EUR/USD pulls away from session highs, stays above 1.0200

EUR/USD has lost its bullish momentum during the American trading hours and started to edge lower toward 1.0200. With Wall Street's main indexes pushing lower after the opening bell, the greenback staged a rebound, causing the pair to turn south.

EUR/USD News

GBP/USD declines below 1.2100 following earlier rebound

GBP/USD declines below 1.2100 following earlier rebound

GBP/USD continues to erase the daily gains it recorded during the European session and trades below 1.2100. The negative shift witnessed in risk sentiment seems to be providing a boost to the safe-haven dollar, weighing on the pair.

GBP/USD News

Gold bulls to challenge $1,800 ahead of US inflation figures

Gold bulls to challenge $1,800 ahead of US inflation figures

Gold kept rallying on Tuesday, hitting a fresh one-month high. The greenback remained weak throughout the first half of the day, recovering some ground after Wall Street’s opening amid the poor tone of US indexes.

Gold News

Iran adopts crypto in foreign trade, debuts with $10 million import order

Iran adopts crypto in foreign trade, debuts with $10 million import order

In a watershed moment for crypto adoption, Iran registered its first official order for importing $10M worth of goods paid for in cryptocurrencies. A private Iranian news agency reported that the Ministry of Industry, Mine and Trade has plans to widely use cryptos in foreign trade.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Majors

Cryptocurrencies

Signatures