Friday, September 12, 2014

12/9/2014: Q2 2014 Employment Growth in the Euro Area

Eurostat latest figures on employment growth in the EU are worrying, despite some positives in quarterly comparatives.

In q/q terms, employment growth slightly accelerated in Q2 2014 to 0.2% from Q1 2014 0.1% reading. And y/y growth also accelerated from 0.1% in Q1 2014 to 0.4% in Q2 2014.

Still, at current rates of growth, it will take euro area some 9 years to return to the pre-crisis levels of employment.

Looking at the countries data, Ireland posted relatively healthy readings in y/y growth terms (1.7% in Q2 2014), but average in q/q terms (0.2% in Q2 2014 up on 0.1% in Q1 2014, identical to the euro area as a whole). In trend terms, things are more worrying. In H2 2013 Ireland managed to expand employment at an annual rate of 3.2% and an average quarterly rate of 0.7%. In H1 2014, the same rates of growth fell to 2% for y/y growth and 0.15% for q/q growth.

In quarterly growth terms, Ireland ranked 4th in the EU28 in employment growth in Q3 2013, 6th in Q4 2013, 16th in Q1 2014 and 10th in Q2 2014. In y/y terms, we ranked 2nd in Q3 and Q4 2013 and 4th in Q1 2014 and Q2 2014. So deterioration in Irish conditions is in part related to the y/y trends in the euro area, but is more pronounced and idiosyncratic in quarterly trends.

Two charts to illustrate:

Ireland still stands in a better condition compared to other so-called 'peripheral' countries. In contrast to Ireland,

  • Greece posted an H2 2013 average q/q decline in employment of 2.75% followed by an average q/q decline of 0.5% in H1 2014. In y/y terms, H2 2013 saw a decline of 0.25% in employment against zero growth in H1 2014.
  • Spain posted q/q average decline rate of 2% in H2 2013 and returned to employment growth of 0.4% on average q/q in H1 2014, which outperformed Ireland's growth rates for the same period. In y/y terms Spain's employment grew 0.1% in H2 2013 and 0.35% in H2 2014. The latter figure is better than Ireland's performance, but comes on foot of much shallower growth in previous 6 months.
  • Italy continued on the trend for falling employment with H2 2013 q/q average decline of 1.95 moderating to a 0.9% drop in H1 2014. In y/y terms, Italian employment averaged decline of 0.1% in H2 2013 and this switched to growth of 0.1% in H1 2014.
  • Cyprus was the worst performer of all 'peripheral' states. The economy posted an average rate of employment decline q/q of 5.05% in H2 2013 and followed up with an average rate of decline of 2.4% in H1 2014. Year on year employment dropped on average by 0.6% in H2 2013 and declined further by 0.25% in H1 2014.
  • Portugal, however, showed some significant gains. Average q/q growth rates in H2 2013 were negative -0.85% but turned strongly positive at +1.5% in H1 2014, outperforming Ireland. In y/y terms, Portugal's employment averaged growth of 0.5% in H2 2013 and this slipped to +0.3% in H1 2014.

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