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Economic Update: Euro Area Inflation and Unemployment Trends in August 2023


Harvest Global Markets :

The Euro area’s annual inflation rate is anticipated to remain steady at 5.3% in August 2023, consistent with the previous month’s figures, according to an initial estimate from Eurostat. This surpasses the earlier forecast of 5.1%, reflecting unexpected inflationary pressures. Among the primary contributors to this inflationary environment, the most substantial annual increase is projected in the category of food, alcohol, and tobacco, with an anticipated rate of 9.8%.

However, this does show a decrease from the 10.8% recorded in July. Additionally, the services sector is expected to experience a slight dip, with the inflation rate dropping from 5.6% in July to 5.5% in August. Meanwhile, the inflation rate for non-energy industrial goods is also poised to decline moderately from 5.0% in July to 4.8% in August. Notably, although still negative, the energy sector’s inflation rate is improving, transitioning from -6.1% in July to -3.3% in August.

Shifting focus to unemployment rates across the Euro area and the wider EU, the seasonally-adjusted figures for July 2023 remain consistent with those from June 2023. Specifically, the unemployment rate in the Euro area remains stable at 6.4%, showcasing resilience in the labor market. A year-on-year comparison highlights progress, as this rate is lower than the 6.7% recorded in July 2022. Similarly, the EU’s unemployment rate remains unchanged at 5.9%, indicating a slight improvement from the 6.1% reported in the same period of the previous year.

Delving into the quantification of the unemployed population, Eurostat’s data reveals an estimated 12.928 million unemployed individuals across the EU in July 2023. Within this, the euro area accounts for 10.944 million of the unemployed.

While these figures show an increase from June 2023, with 35,000 more individuals unemployed in the EU and an additional 73,000 in the euro area, the positive trend becomes evident when compared to July 2022. In the span of a year, the number of unemployed individuals has decreased by 209 thousand in the EU and a more substantial 264 thousand in the euro area, underscoring a gradual improvement in the employment landscape.

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