Eurozone unemployment falls to decade low of 8.2 pc

Unemployment across the 19-country eurozone has fallen to its lowest level since the most acute phase of the global financial crisis a decade ago.

Eurostat, the European Union's statistics agency, revealed today that the unemployment rate in July was 8.2 per cent. That was unchanged from the previous month's rate, which Eurostat revised down from 8.3 per cent.

The rate is now the lowest since November 2008, when unemployment was soaring in the immediate aftermath of the collapse of US investment bank Lehman Brothers, the most symbolic moment of the financial crisis.

Unemployment hit a peak of 12.1 per cent in 2013 when the crisis, at least for the eurozone, morphed into a government debt crisis largely centered on Greece.

Eurostat said 16.82 million people were unemployed across the eurozone in July, down 82,000 on the previous month. Though the overall decline was widespread, there are still big disparities across the region.

Some countries, like Germany, are operating at what economists term full employment, with the jobless rate only 3.4 per cent. Others such as Spain and Italy have double-digit unemployment rates.

Though the falls in unemployment over the past few years has been welcome, wages haven't picked up as much as they would normally be expected to during an economic recovery the general rule of thumb is that as employment levels increase amid higher levels of growth, workers can win bigger pay awards from firms, who are hungrier to recruit new staff to meet the growing demand.

The European Central Bank, which sets interest rates for the countries that use the euro as their currency, wants wages to increase to help lift soft underlying levels of inflation. Despite a second-quarter surge in wages, that hasn't happened yet.

Separate figures today from Eurostat showed that underlying inflation remains fairly anemic despite a sizeable 2.2 per cent jump in wages during the second quarter.

In the year to August, the core rate, which strips out potentially volatile items such as food and energy, dipped to 1 per cent from the previous month's 1.1 per cent.

The headline rate, which has been elevated because of the rise in oil prices, also dipped to 2 per cent from 2.1 per cent.

Bert Colijn, a senior economist at ING, said the core rate needs to move higher for a "sustained higher inflation rate" and "the much-anticipated acceleration has so far failed to happen."