Eurozone unemployment fell further in June as the proportion of jobless workers across the eurozone countries dropped to 9.1 per cent last month, down from the 9.2 per cent in May, reaching its lowest level since February 2009. In the EU as a whole, including UK, the number of unemployed people fell to its lowest level since December 2008, at 7.7 per cent.
In June, the lowest unemployment rates were recorded in Germany and Malta while the highest unemployment rates were recorded in Greece and Spain. A decline in unemployment should theoretically lead to inflationary wage increases, but consumer prices rose by just 1.3 per cent on a yearly basis, as the inflation rate was unchanged at its lowest level in 2017.
In the meantime, in its monetary policy meeting last week, the Bank of England kept its record low interest rate unchanged, as expected. At the same time the central bank maintained the size of its monetary stimulus at £435 billion.
The bank’s Monetary Policy Committee (MPC), headed by Governor Mark Carney, voted 6-2 to hold the interest rate at a historic low of 0.25 per cent. All members agreed that any increases in the bank rate would be expected to be at a gradual pace and to a limited extent. The MPC forecasts two interest rate hikes over the next three years, one more than it had estimated previously. Mr Carney and his fellow policymakers said that the first rate hike would likely take place in the third quarter of 2018.
Finally, in the US, the Commerce Department revealed that construction spending fell by 1.3 per cent to annual rate of $1.206 trillion in June, following an upwardly revised May figure of $1.222 trillion, missing economists’ forecast of a 0.4 per cent rise. The unexpected decline in construction resulted due to a sharp drop in public spending of 5.4 per cent to a rate of $265.1 billion, the largest drop since March 2002. Spending on non-residential construction rose by 0.1 per cent to $437.8 billion while spending on residential construction decreased by 0.2 per cent to $502.9 billion.
The Commerce Department said that notwithstanding the June decline, construction spending increased by 1.6 per cent on a year-on-year basis.
This report was compiled by Bank of Valletta for general information purposes only.