Surprise November dip in eurozone unemployment masks true picture

Jobless rate fell for second month in a row despite Covid crisis

A pedestrian passes closed shop in Berlin, Germany. The eurozone's November jobless rate was substantially higher than the 6.6 per cent in November 2019, with unemployment rising by 1.42 million. EPA

Eurozone unemployment fell slightly in November for the second month in a row with the jobless rate dipping to 8.3 per cent of the workforce from 8.4 per cent in October.

The figure for those out of work decreased by 172,000 in November, said the EU’s statistics agency Eurostat, as the declining jobless rate followed a similar pattern to October, however, the positive data might mask the real picture.

The jobless rate was substantially higher than the 6.6 per cent in November 2019, with unemployment rising by 1.42 million as the pandemic takes its toll on the economy.

Eurostat said the data might understate the economic damage because the figures disregard people registered as unemployed but are no longer looking for a position or aren’t available for work -- for example, because they have to look after their children.

“This leads to discrepancies in the number of registered unemployed and those measured as unemployed,” Eurostat said. “The Covid-19 outbreak and the measures applied to combat it have triggered a sharp increase in the number of claims for unemployment benefits across the EU.”

The November dip surprised economists, who were expecting a slight increase to 8.5 per cent, but with much of the region under heightened restrictions the outlook is less positive.

“In 2021, we expect unemployment to continue to rise, peaking at around 9 per cent, and think it is unlikely to regain its 2019 fourth quarter level until the end of 2022,” said Capital Economics.

Retail sales across the eurozone plunged by 6.1 per cent on the month in November, when much of the bloc was subject to movement restrictions, in the biggest decline since the first lockdown in April.

The European Central Bank boosted its monetary stimulus by €500 billion ($611.93bn) in December, taking the total stimulus since the start of the pandemic to prop up companies and households to €1.85 trillion.

While eurozone unemployment improved slightly across the working population as a whole, younger workers were not so fortunate, with the unemployment rate for under-25s rising to 18.4 per cent in November from 18 per cent the previous month.

Italy’s unemployment rate fell to 8.9 per cent with about 63,000 jobs created, according to statistics bureau Istat.

Italy was the first Western country hit by coronavirus in February, with the country regaining control of the outbreak after a lengthy lockdown. The more positive figure was also reflected in the youth unemployment rate for 15 to 24 age group, which fell to 29.5 per cent from October’s 30.3 per cent.

Italy's overall employment rate, one of the eurozone’s lowest, rose to 58.3 per cent in November from 58.1 per cent.