The steady decline in joblessness comes on the back of three years of massive support from the ECB to help the 19-country single-currency zone survive the eurozone debt crisis. Picture: ISTOCK
The steady decline in joblessness comes on the back of three years of massive support from the ECB to help the 19-country single-currency zone survive the eurozone debt crisis. Picture: ISTOCK

Brussels — Europe’s economic recovery is gaining pace, with the eurozone’s unemployment level at its lowest since December 2008 and inflation on the rise, official figures showed on Wednesday.

The EU’s official statistics agency said the joblessness rate in the single-currency area fell to 8.5% in February, down from 8.6% in January.

Eurostat said inflation in the eurozone jumped to 1.4% in March, a leap from February’s 1.1%. That edges inflation closer to the European Central Bank’s (ECB) target, although it is still a way off the desired 2.0%. The data are in line with recent statistics that suggest the European economy is growing at a solid pace after years of weak recovery following the debt crisis.

The steady decline in joblessness comes on the back of three years of massive support from the ECB to help the 19-country single-currency zone survive the eurozone debt crisis.

The ECB has bought more than €2-trillion worth of bonds during that time, helping trigger growth but struggling to push inflation towards its 2.0% goal.

In a sign of growing confidence in the zone’s recovery, the ECB dropped a long-standing pledge in March that it was ready to ratchet up bond-buying if needed, taking a small step towards the stimulus exit door.

But inflation remains well below the central bank’s 2.0% target, which may give ECB head Mario Draghi second thoughts about turning the stimulus off completely in 2018.

"The ECB will tread very cautiously in raising interest rates," said economist Jessica Hinds of Capital Economics. "We have pencilled in the first hike for September 2019, later than investors seem to expect."

There were also regional differences in unemployment, which remained high in Greece at 20.8% in December, the last month for which figures were available, Spain at 16.1% and Italy at 10.9%. German unemployment remained super-low at 3.5% in February, with the Netherlands dropping to 4.1%. The youth joblessness rate was also trending downwards. In February, youth unemployment was 17.7% in the euro area, down from 19.4% in February 2017.

But rates for people under 25 years old remained high in Spain at 35.5% in February, down from 40.8% a year earlier, and in Italy at 32.8%, down from 35.2% in February 2017. Greece’s rate was 45% in December 2017, the last month for which youth figures were available, down from 46.7% in February 2017.

"The level of youth unemployment in a number of countries is unacceptably high," European Commission deputy spokesman Alexander Winterstein told reporters.

"It will not induce young people to be enthusiastic about Europe," he said when asked if it could hurt during national elections and in European Parliament elections in 2019.

During the worst of the debt crisis in 2013, eurozone unemployment reached a record 12.1%. Since then, the economic situation has slowly improved, but unemployment remains much higher than the average rate before the crisis, when it was 7.5%.

Economic growth in the 19-country eurozone hit 2.3% in 2017, the highest level in a decade.

AFP