Thursday, March 15, 2012 - 06:00

Analysis: Eurozone Employment Fell 0.2% In 4Q As Expected

Seasonally adjusted employment:

4Q 2011: -0.2% q/q, -0.2% y/y

MNI survey median: -0.2% q/q MNI survey range: -0.3% to +0.2% q/q

3Q 2011: -0.2% q/q (revised from -0.1%) 2Q 2011: +0.2% q/q (unrevised) 1Q 2011: flat q/q (revised from +0.1%)


FRANKFURT (MNI) - Employment in the Eurozone fell much as expected in 4Q, with only Germany, Finland and Austria showing gains on the quarter, Eurostat reported on Thursday.

Taking into account 3Q's downward revision, 4Q's 0.2% quarterly slide brought the employment level to 146.4 million persons, 0.2% lower than the same period one year ago. For 2011 as a whole, employment was up 0.2% in the Eurozone after dipping 0.5% in 2010.

The sharpest decrease was noted in construction, where payrolls fell 1.5% in 4Q following 3Q's 1.6% decline. Staffing in agriculture, forestry and fishing also took a hit, falling 0.8% after -1.0% in 3Q. Weighed by the 0.2% fall in manufacturing payrolls, employment in industry contracted 0.3% in 4Q.

In the services sector, real estate companies boosted their staffing levels by 2.2% on the quarter, undoing the previous two quarters of declines. Payroll levels in professional and support services also strengthened on the quarter, rising 0.4% after slipping 0.2% in 3Q. Conversely, financial and insurance staff fell 0.1% in 4Q after recovering by the same amount in 3Q.

Among the larger Eurozone economies, German employment rose 0.3% in 4Q, while employment in France was unchanged on the quarter. Italian employment fell 0.1% in 4Q, while Spanish payrolls were down 1.0%.

Employment in both Finland and Austria rose 0.3% on the quarter, matching Germany's rate. On the other side of the spectrum, Portugal's 2.7% fall was the sharpest among Eurozone states.

The tendency of the labour market to follow output trends with a lag also does not argue for a quick turnaround in employment, given 4Q's GDP contraction.

Reflecting concerns about waning demand, companies in the private sector trimmed staff over the first two months of this year, a recent PMI report showed.

A European Commission survey suggested that employment could remain weak and possibly fall further in the near term, as hiring prospects in all major sectors remained below average and were revised down everywhere except construction.

"With the EU economy set to stagnate and a mild recession unfolding in the euro area at the current juncture, the labour market situation is likely to worsen over the forecast horizon," the Commission said last month.

Rising unemployment would certainly not bode well for governments' cost-cutting programs and could weigh further on consumer discretionary spending while feeding jobless fears.

In line with downward revisions to economic growth projections, analysts polled by the European Central Bank in January hiked their jobless rate forecasts sharply to 10.6% for both 2012 and 2013 from 10.0% and 9.7%, respectively.

"Comparing the point forecasts with the means of the probability distributions, the balance of risks is assessed to be slightly on the downside for 2012 and on the upside for 2013," the ECB said in its monthly bulletin last month.

-- Frankfurt bureau: +49-69-720-142; email: --

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