Eurozone unemployment a bright spot amid growing gloom

In this picture taken Aug.7, 2018 containers are located at the container terminal Tollerort in the port of Hamburg, Germany. (Axel Heimken/dpa via AP)

LONDON — Unemployment across the 19-country eurozone fell in November to a decade-low rate, official figures showed Wednesday, but worries over the economic outlook have stoked concerns it may not fall much lower, if at all.

Eurostat, the European Union's statistics agency, said a 90,000 monthly fall in the number out of work to 13.04 million reduced the overall rate to 7.9 percent from the previous month's 8 percent.

Unemployment across the eurozone has been falling steadily from a peak of 12.1 percent in 2013 as the region recovered from the global financial crisis. However, ongoing worries about the level of government debt in a number of countries kept unemployment high, such as Greece and Spain.

In recent days, evidence has been piling up that the eurozone recovery lost more momentum than anticipated at the end of 2018, particularly in Germany. And that could have an impact on businesses' hiring intentions. Unemployment is considered a lagging indicator in that it takes months for changes in the broader economy to feed through into the labor market.

Bert Colijn, a senior economist at ING, said the decline was a relief as "it indicates that uncertainty about the economic outlook and a slowing pace of growth has not caused employment growth to grind to a halt just yet."

Colijn said there are signs though that firms are "adjusting their employment needs downwards" and that could cause the unemployment decline "to slow again in the months ahead."

Much of the outlook hinges on Germany, Europe's biggest economy, which this week has suddenly, almost from nowhere, become a concern.

News that industrial production in Germany slumped by 1.9 percent in November has fueled concerns of a possible recession.

Since the German economy contracted by a quarterly rate of 0.2 percent in the third quarter of 2018 largely as a result of one-time factors related to new car emissions standards, another drop in the fourth-quarter drop would mean Germany will have entered a recession, defined as two straight quarters of negative output.

Still, unemployment remains super-low in Germany at 3.3 percent, in sharp contrast to the rates still seen in those economies that were at the forefront of the eurozone's debt crisis. Greece's unemployment rate, though sharply down from its peak, was still 18.6 percent in September.

There are other clouds beyond Germany hanging over the eurozone economy at the start of the new year.

France, the eurozone's No. 2 economy, is also facing difficulties. The country's statistics agency INSEE revealed Wednesday that consumer confidence plunged in December to a four-year low largely as a result of the yellow vest protests that brought much of France, but particularly Paris, to a near-standstill in the crucial Christmas trading period.

In addition, trade tensions between the U.S. and China have the potential to further weigh on a softer global economy while Britain's impending exit from the EU could be another negative hit particularly if the country crashes out of the bloc without a deal to smooth its transition to new trading arrangements.

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