Eurozone economic recovery struggling to gain momentum as unemployment remains high

 

The Eurozone economy is gradually improving but its recovery is failing to build on a solid start to the year, figures published yesterday show.

 

The rate of joblessness in the Eurozone edged down in April, marking 24 months of falling or flat unemployment, according to Eurostat.

 

However, unemployment in the currency bloc was still high at 11.1 per cent in April, down from March’s 11.3 per cent. While the figure is a three-year low, it has not come down much from its recession peak of 12.1 per cent. 

 

Meanwhile, a survey of the service sector, Markit’s purchasing managers’ index, fell to a score of 53.8 in May. Scores above 50 imply growth with higher scores pointing to faster growth. 

 

When the survey’s score is combined with Markit’s earlier surveys of the construction and manufacturing sectors, it points to a slower rate of economic growth.

 

Spain had the highest survey score across all three sectors, but it also had the second highest unemployment rate in the Eurozone at 22.7 per cent. The highest unemployment was in Greece at 25.4 per cent. 

 

“The Eurozone recovery lost some of the wind from its sails in May,” said Markit economist Chris Williamson.

 

“The weak euro is boosting manufacturing and households are benefiting from lower inflation, but the region’s high unemployment continues to limit spending on goods and services. Heightened uncertainty surrounding the Greek debt crisis is also acting as a brake on growth.”

 

The Eurozone economy grew by 0.4 per cent during the first three months of the year, its fastest growth since 2013.