Eurozone unemployment falls to lowest since 2009 as strong growth run continues

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The Eurozone grew by 2.5 per cent in the last year (Source: Getty)

Unemployment in the Eurozone fell to its lowest in almost nine years in September as the bloc continued its strong run of economic growth.

The proportion of the labour force out of work fell to 8.9 per cent, one percentage point lower than a year ago and the lowest since January 2009, according to the European Commission.

The economy in the single currency area expanded by 0.6 per cent during the third quarter of 2017, a slight slowdown compared to the second quarter.

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The latest data adds to a raft of data over the course of the last year “indicative of a sustained Eurozone economic recovery”, said Oliver Kolodseike, senior economist​ at the Centre for Economics and Business Research.

He said: “With the unemployment rate inching down further and wage growth outstripping inflation, consumer spending should continue to support the Eurozone economy in the coming months.”

The European Central Bank (ECB) will welcome the signs of continued momentum in the Eurozone recovery as it prepares to gradually scale back stimulative asset purchases in the new year. The ECB will buy €30bn (£26bn) in bonds per month after December, down from €60bn.

However, the central bank will be less pleased with inflation figures, also released today, which showed price rises slowed to 1.4 per cent in the year to October, down from 1.5 per cent in the month before.

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While tightening monetary policy through its asset purchases, the ECB has remained committed to an extraordinary degree of accommodation in its interest rates “well past the horizon of the net asset purchases”.

Raj Badiani, director of economics at IHS Markit, said: “The ECB still reluctant to unwind its monetary policy supports too hastily, with the latest inflation data pointing to core inflation retreating to 0.9 per cent in October, which will underpin continued central bank caution.”

He added: “In addition, a tame outlook for oil prices will limit upside for inflation in 2018/19, and be less damaging to household purchasing power.”

The fall in inflation weighed on the euro, amid a slew of otherwise positive data. The euro failed to regain losses of 0.15 per cent over the course of the day against the US dollar at the time of writing, near its lowest point since July.

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