By Joshua Kirby and Ed Frankl
Unemployment remained at historic lows in the eurozone at the end of the second quarter, adding to signs of economic resilience and cementing the likelihood that the European Central Bank will keep holding interest rates in place.
The jobless rate stood at 6.2% in June in the 20-member currency area, unchanged from a revised May estimate and matching historically low levels, European Union statistics showed Thursday.
Unemployment decreased by 62,000 people over the month. That was despite the uncertainty created during the period by higher import tariffs set out at the beginning of April, and the threat of even higher duties as the EU negotiated with President Trump’s administration on a trade deal. Even before the tariff headwind began blowing, the eurozone economy was suffering from a surge in energy costs that followed Russia’s full-scale invasion of Ukraine and the subsequent curtailing of Russian gas flows.
“It is remarkable,” ING economist Bert Colijn wrote in a note.
“Despite all the economic sluggishness and uncertainty in recent years, the eurozone labour market has remained as strong as ever,” Colijn said.
Unemployment should continue to trend at all-time lows, offering a boost to domestic demand and wider economic growth, he said.
A robust labor market underscores the resilience of the eurozone economy, which shrugged off economists’ forecasts for a contraction over the second quarter to book a 0.1% expansion in the three months through June, figures this week showed.
That was despite a contraction in Europe’s largest economy, Germany. Still, there were few signs of an increase in German joblessness in July, according to separate figures set out Thursday by the German statistics authority. This suggests the German economy could rebound at the start of the third quarter.
Inflation in Germany eased slightly to 1.8% in July from 2.0% in June, according to EU-harmonized data also published Thursday, below the ECB’s 2% target. Meanwhile, in France, annual inflation held steady at 0.9% as energy prices fell on year.
Despite cool inflation, the eurozone’s economic resilience increases the chance that rate setters at the ECB will continue to hold interest rates at 2%. The central bank this month ended a series of seven straight cuts to its key interest rates and President Christine Lagarde said the bank was “in a good place.”
Inflation is likely to have dropped below the bank’s 2% target this month, and should average 1.6% next year, according to the ECB’s projections. But the bank won’t rush to lower rates in response, Lagarde said.
“We are not going to be moved away by some minor deviation,” she said.
Write to Joshua Kirby at joshua.kirby@wsj.com and Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
07-31-25 0831ET