By Joshua Kirby and Ed Frankl
The eurozone’s unemployment rate rose in August, strengthening the possibility that the European Central Bank will move next year to lower interest rates after a period of pauses.
The European Union’s statistics agency said Thursday that the unemployment rate rose to 6.3% from 6.2% in July as the number of workers without a job increased by around 11,000.
Despite the slowing of the eurozone economy after the early part of the year, when exports surged to get ahead of U.S. tariffs, unemployment has remained low by historic standards. July’s level matched a record low for the eurozone. The ECB in its latest projections expects the labor market to remain resilient, with the unemployment rate averaging at 6.3% in 2026 before falling to 6% at the end of 2027.
“The European labor market has come through recent shocks in unexpectedly good shape,” ECB President Christine Lagarde said in August.
However, the job market is quite divided between the south and the north of Europe, where economic growth is diverging, ING economist Bert Colijn said in a note to clients.
Unemployment is down compared with August 2024 in Spain, Italy and Greece, but up in Germany and France.
The south is seeing stronger job growth, especially in the private sector, while slower economic growth in the north of the eurozone is reflected in the weaker labor market there, Colijn said.
“This means that while the average eurozone job market performance is quite strong, weak spots can easily be found right now,” he added.
Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby and Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
10-02-25 0600ET