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Europe - Growing doubts over labour market recovery

12 September 2011

Divergence continues to prevail between the labour markets of the different member states of the European Union (EU). Despite a recent slowdown in unemployment, the number of Europeans looking for work is rising again, albeit moderately, according to the latest Monthly Labour Market Fact Sheet published by the European Commission.

The decrease seen in unemployment by -705,000 across the EU between April 2010 and March 2011 was followed by an increase of +83,000 in the following four months. From June to July alone, unemployment rose by +18,000, which is setting the scene for weaker employment. At the same time, the average EU unemployment rate remained stable, at 9.5%, the same level as in May and June and -0.2 percentage points below the peak of July 2010.
Member states already experiencing a lower-than-average unemployment rate, such as Germany and Austria, have seen unemployment drop even further. In contrast, some peripheral countries, such as Greece and Spain, have seen persistently high or increasing unemployment.
These contrasts are also recorded in the case of youth unemployment. However, the EU youth unemployment overall rate is improving slightly, edging down in July 2011, at 20.7%, against 20.9% two months earlier, and down by -0.2 percentage points on July last year.
Hiring activity remains positive with an increase in online labour demand i.e. employer online recruitment activity, although the growth of the agency work sector has slowed down further.
In the current uncertain economic context, employment and unemployment expectations are at best mixed, as consumers' anticipation of a rise in unemployment has gained ground, while employers' expectations vary across sectors. The outlook is one of greater risk of deterioration and persistent divergences between member states.

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