Thursday, June 30, 2022 12:03 PM EDT
The outlook for the eurozone labour market is rosy
Despite a weakening economy, the labour market continues to outperform. At 6.6%, the eurozone unemployment rate has reached a new low. The widespread increases in employment are cushioning the negative impact of the Ukraine war and inflation on the economy and will therefore soften the blow to GDP in the second quarter and over the course of the summer.
While surveys do show that hiring intentions are slowing at the moment, we don’t see a large turnaround happening in the eurozone labour market. Vacancy rates are at all-time highs and even if the economy were to fall into a mild recession, we expect the impact on unemployment to be modest. With shortages so rampant at the moment, businesses are likely to try to hold onto staff at the start of a downturn to make sure that they don’t have to rehire shortly after. Only if a prolonged or deep slump were to occur, we expect a substantial cooling of the labour market.
At this point, wage pressures from the labour market persist. While substantially higher wages still have to materialise, wage growth is still set to trend markedly higher in the quarters ahead. So while the economy is already slowing significantly, the labour market’s traditional lag keeps the unemployment outlook quite rosy for the coming period.
Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...
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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. ING forms part of ING Group (being for this purpose ING Group NV and its subsidiary and affiliated companies). The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.
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