Slack Eurozone labour

The Eurozone's unemployment rate remained unchanged at 9.8% in November from October. This is in line with market expectations, the lowest in seven years (September 2009) and an improvement from the 10.5% rate recorded in the same month a year earlier.

While the region's unemployment rate had clearly been trending lower since peaking at 12.1% in June 2013, it remains below the OECD's non-accelerating inflation rate of unemployment (NAIRU) estimate of 8.8% this year.

This indicates excess capacity in the euro area's labour market that, in turn, suggests insufficient pick-up in demand that would provide a meaningful lift consumer prices in the near-term.

The ECB needs strong growth to reduce the slack in the labour market to lift inflation. The latest PMI surveys offer good tidings.

Markit Economics' final Eurozone Composite PMI rose to 54.4 in December from a preliminary reading of 53.9 and 53.9 in November. It is the highest reading since May of 2011 as an acceleration in manufacturing - up to 54.7 (the best since April 2011) from 53.7 in November - offset a slight dip, albeit, still expanding services sector (down to 53.7 from 53.8).

Across the region, the lowest jobless rate was recorded in Germany (4.1%) and Malta (4.8%) while Greece (23.1%) and Spain (19.2%) had the highest.

Read more: EurozoneUnemployment rateOECDECBEurozone Composite PMIGermanyGreeceMaltaMarkit Economics
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