The eurozone’s unemployment rate fell to its lowest rate in more than a decade during November, a sign that the currency area’s economic slowdown during the last few months is unlikely to turn into a recession.

Figures from Eurostat showed last week that the seasonally-adjusted jobless rate decreased to 7.9 per cent in November from a revised eight per cent in October. Economists had forecasted that the rate would remain unchanged at October’s original estimate of 8.1 per cent.

But in spite of five years of economic growth, big differences linger among members of the currency union, with the jobless rate standing at merely 3.3 per cent in Germany and as high as 17.7 per cent in Spain.

Meanwhile, concerns over a prolonged slowdown in the eurozone grew after a sharp fall in German industrial production in November increased the likelihood of the region’s manufacturing powerhouse entering a technical recession, defined as two consecutive quarters of negative growth.

Factory production in Europe’s largest economy declined by 1.9 per cent in November compared with October, following falls of 0.8 per cent and 0.1 per cent in the previous two months. This means that the all-important industrial sector in Germany was a considerable drag on the overall economy during the fourth quarter of last year. Germany’s economy contracted in the third quarter largely because of one-time factors related to new car emissions standards.

Finally, minutes from the most recent US interest rate setting Federal Open Market Committee (FOMC) meeting showed that last December’s rate hike came with reluctance from a few members, who argued that the lack of inflationary pressures mitigated the need of another increase in rates. Officials acknowledged that the policy path ahead is “less clear”.

The minutes noted that the low-inflationary backdrop means that the Federal Reserve can “afford to be patient about further policy firming”. The members agreed that “some further gradual increases” in the benchmark funds rate would be appropriate. It is not clear what that translates to in practical terms, as, only a few months ago, the FOMC was hinting at four hikes in 2019.

This report was compiled by Bank of Valletta for general information purposes only.