Eurozone: A Sluggish economy offers no extra jobs

Eurostat, the EU statistical service, released yesterday some mixed data on Eurozone economic prospects. For one thing, euro area (EA17) unemployment rate was reported at 12.1% in November 2013, stubbornly stable at this high level since last April. The EU28 unemployment rate was 10.9%, stable since last May. However, retail sales marked a good upturn in November compared with October 2013, with an increase of 1.4% in the euro area (EA17) and 1.2% in the EU28. On a yearly basis, in November 2013 compared with November 2012, the retail sales index increased by 1.6% in the euro area and by 2.0% in the EU28. Let’s take one thing at a time. Starting with unemployment, the percentage of workers without employment may appear stable for many months, but on a yearly basis the number of people without a job has increased. Eurostat states that in November 2013 “In both zones (Eurozone and EU28), the rates increased compared with November 2012, when they were 11.8% and 10.8% respectively”. It must be noted that during that twelve month period, the percentage of unemployed people increased faster in Eurozone, to 12.1% from 11.8% than in the EU28 (10,9% from 10.8%). Millions without a job Eurostat estimates that 26.6 million men and women in the EU28, of whom 19.2 million were in the euro area, were unemployed in November 2013. Compared with November 2012, unemployment rose by 278 000 persons in the EU28 and by 452 000 in the euro area. Those last two numbers present a rather perplexing problem. How is it possible that the increase of the number of the unemployed people in the EU28, is much smaller than the relevant figure for the Eurozone of only 17 member states? As everybody knows, Eurozone comprised 17 member states in November 2013, while the EU28 comprises 11 more countries. In the face of it, the increment of unemployment in the EU28 must be larger than the relevant figure for Eurozone. The only logical explanation for this puzzle must be the following. Despite the fact that the percentage of unemployment increased in both zones, the number of the unemployed in the 11 EU countries which didn’t belong then to the euro area (Bulgaria, the Czech Republic, Denmark, Croatia, Latvia, Lithuania, Hungary, Poland, Romania, Sweden and United Kingdom), must have decreased by 174 000. Now, the fact that the percentage of unemployed people in those 11 countries increased by 0.1 decimal point between November 2012 and 2013, doesn’t exclude the possibility that the absolute number of unemployed had decreased during the same period. Obviously, the number of the unemployed in those 11 countries increased slightly as a percentage of the working age population, but decreased as an absolute number. More retail sales Passing to the retail trade, the tangible increase of sales is a positive sign, unlike the persistently high unemployment rate. According to Eurostat in November 2013 compared with October 2013, the seasonally adjusted volume of retail trade rose by 1.4% in the euro area (EA17) and by 1.2% in the EU28. The same source announced that, “In November 2013 compared with November 2012 the retail sales index increased by 1.6% in the euro area and by 2.0% in the EU28”. It’s obvious that on a year to year account, the increase of retail sales is larger than the month to month rate. This is also a good sign for both the Eurozone and the EU28. The retail trade sectors which performed better were the ‘Non-food products’. In this category belong the following items: textiles, clothing, footwear, electrical goods, furniture, computer equipment, books, pharmaceuticals, medical goods plus sales through mail orders and the Internet. On a yearly basis, the sales of those items increased by 2.4% compared to a 1.6% average for the entire retail sales sector. Sales of ‘food, drinks and tobacco’ marked only a 1.4% increase during the same twelve month period. Developments in both those fronts that is employment and retail sales, are pointing to opposing directions, as far as growth prospects are concerned. However, in reality they justify those who argue that growth in Europe will be torturously slow during the next months and will have no visible effect on the labour market.