EU unemployment low as risks emerge for growth
MARK BEUNDERMAN
08.01.2008 @ 09:29 CET
EU unemployment continues to be relatively low, new figures have revealed, but confidence in the economy appears to be weakening, with the EU presidency warning that there are "downside risks" to growth.
Figures released by EU statistical office Eurostat on Monday (7 January) show that the jobless rate in both the EU as a whole and the eurozone area is substantially lower than it was a year ago.
The construction and retail sectors saw confidence slip
(Photo: EUobserver.com)
Unemployment in the EU-27 stood at 6.9 percent in November, which is the same as in October, but lower than in November 2006 (7.7%).
The euro area countries did less well than the EU-27 as a whole, with unemployment in the common currency area recorded at 7.2 percent - again the same figure as in October, but lower than in November 2006 (7.9%).
The figures highlight the strong performance of the European economy over the last year, with 23 member states witnessing a fall in their unemployment rate over the course of 2007.
The lowest rates in November 2007 were registered in the Netherlands (2.9%) and Denmark (3.2%), while Slovakia (11.0%) and Poland (8.5%) saw the highest jobless levels.
But the positive employment figures come at a time when observers are warning that 2008 may prove a less rosy year for the European economy than 2007.
Slovenian finance minister Andrej Bajuk, whose country holds the EU presidency, said on Monday, "the growth momentum continues to be robust, underpinned by relatively solid fundamentals."
"However, downside risks have clearly increased," he added, according to Reuters.
European Commission figures released on Monday showed that economic confidence continues to weaken in both the EU and the euro area.
The commission's Economic Sentiment Indicator (ESI) for December dropped by 0.4 in the EU-27 and by 0.1 in the euro area compared to November, to 107.1 and 104.7 respectively.
Not only did managers' production expectations and assessment of order books deteriorate, but consumers' view on their financial situation also became more pessimistic, and the retail and construction sectors saw confidence slip as well.
The commission said, however, the ESI "remains well above its long-term average" in the EU and the eurozone, with confidence in Europe's services sector even growing somewhat in December.
Falling economic confidence, downward risks to growth and turmoil on the financial markets come as a challenge to the European Central Bank, which is likely to come under political pressure to slash interest rates in order to inject money into the economy.
The Frankfurt-based bank, however, also sees itself faced with mounting inflation, as food and energy costs soar.
Eurostat said on Friday that euro area annual inflation is expected to be 3.1 percent in December 2007 - well above the bank's two percent target.
A rate cut would only contribute to the inflation trend, with some experts predicting the ECB will resist cutting interest rates until later this year, if economic prospects continue to look grim.
