The Euro Area’s Economy Has Been Re-Energized

Euro area’s real GDP increased by 0.6% in the fourth quarter of last year following a 0.7% advance in the previous period. Eura Area GDP was 2.7% higher in Q4, 2017 than in the same quarter of 2016.

Over the whole year 2017, real GDP rose 2.3% in the Euro Area, compared with 1.8% growth in the previous year.

Euro GDP growth in the fourth quarter was driven by exports and fixed investment while consumer spending increased at a slower rate. Among the zone's largest economies, growth eased slightly in Germany and Italy, was unchanged in Spain and picked up in France.

The Euro Area’s Job Market Strengthened

The unemployment rate in the Euro Area edged down to 8.5% in February of 2018 from 8.6% in the previous month, its lowest jobless rate since December of 2008. The unemployment rate fell nearly a full percentage point from 9.5% a year earlier.

The simplest explanation for the improving employment picture in the Euro Area is that economic growth sped up by nearly a full percentage point in 2017 compared to 2016. In other words, a stronger economy does create jobs.

As previously noted unemployment is now declining in both the so-called periphery countries which have financial problems as well as the larger, more stable members of the block.

In February France’s unemployment rate was 8.9%, Germany’s 3.5%. Italy’s 10.9%, and Spain’s was 16.1%.