(Source: Belfast Telegraph)
Last Friday the euro area officially exited recession with the
release of third quarter GDP figures. This brought an end to five
consecutive quarters of contraction. The euro area now joins the US,
which also returned to growth in Q3, and follows Japan, which posted
growth one quarter earlier.
A resumption of growth is clearly welcome, but, it does not mean
it is time to pop open the champagne corks. It is well known that
the labour market is a lagging indicator of economic activity and
even when growth returns unemployment will rise for some time
thereafter.
This was brought into sharp focus in recent weeks in the US. One
week after the robust Q3 GDP figures, it was revealed that the US
unemployment rate rose to 10.2%. Unemployment has more than doubled
since its 2007 low and the October figures represented the first
time that the unemployment rate has hit double-digit figures in 26
years. To date, the US has lost a hefty 7.3m jobs since the
recession began.
Meanwhile, on the other side of the Atlantic, the euro area's
unemployment rate is also hovering around the 10% mark, albeit just
below it. While it too is expected to join the double-digit
unemployment rate club in the months ahead, the scale of the job
losses in Europe have been less marked than in the US.
The modest rise in the euro area's unemployment conceals the
rocketing levels of unemployment in one economy -- Spain. Since the
beginning of the deterioration in euro area labour markets in March
2008, Spain has accounted for almost 60% of the increase in
unemployment in the entire Euro area region.
The Spanish unemployment rate currently stands at a staggering
19.3%, with only Latvia experiencing a higher rate at close to 20%.
In addition, its youth-unemployment rate (18-24) is 40% -- twice
Northern Ireland's current record high.
Meanwhile Britain and the Republic are still in recession with
the latter, like Spain, also expected to contract next year.
However, unlike their counterparts in the US and the euro area, both
Britain and the Republic unemployment rates failed to rise in their
latest surveys despite the continued fall in economic output.
Earlier this month Britain's unemployment rate fell short of an
expected rise to 8.0%. It now looks increasingly unlikely that
Britain will be joining Northern Ireland in the double-digit club.
However, the same cannot be said for the West Midlands.
