The Wilder View

Unemployment Rates Across the Euro Area – Tough Times in Key Markets

Today Eurostat released its unemployment rate figures for the month of August. The Euro area unemployment rate held firm at 11.4% for the third consecutive month. Spain still has the highest unemployment rate in the euro area, 25.1%, and Greece is catching up quickly, 24.4% (in June, which is the latest data point).

The chart below illustrates the level of the unemployment rate and its month-month change for the euro area 12 countries.

The periphery are underperforming the average, with Spain, Greece, Portugal, and Ireland leading the way. Internal devaluation, or driving up the unemployment rate to reduce relative prices with demand, is really taking its toll. Respectively, the unemployment rates in Spain, Greece, Portugal, and Ireland are 178.9 ppt, 234.2 ppt, 93.9 ppt, and 212.5 ppt above their pre-crisis minimums (loosely defined since January 2008) – a simple average of 179.9 ppt above the joint minimum for these four countries. The average euro area 17 unemployment rate is just 56.2 ppt above its 7.3% pre-crisis minimum. Hard days in the periphery, to be sure. Against this backdrop, weekend protests in Paris, Madrid, Lisbon, and Rome are not a surprise.

I further point out the troubling trend in the French labor market, as the new government presents its fresh austerity budget for 2013.

This budget is highly dependent on tax revenue and positive growth momentum, which is likely to disappoint amid such deterioration in domestic demand. See Ambrose Evans-Pritchard on the expected budget impact.

One Response to “Unemployment Rates Across the Euro Area – Tough Times in Key Markets”

Erico WulfOctober 2nd, 2012 at 12:55 pm

What about internal (european)labor mobility?.Young spaniards are moving to Germany, so are surely doing so , workers from Greece. I guess the "real" unemployment rate might be even higher, if we consider the fact that there has been a change (drop) in domestic labor force participation rates ,in those countries with its economies in recession.By the same token , unemployment in Germany and other host countries, might begin to increase in coming months, faster than expected.

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