Standard Chartered’s Christopher Graham discusses the resilience of the Euro-area labour market despite recent economic shocks. The report highlights that employment growth and vacancies indicate a more balanced labour market, which may lead to lower wage growth and inflation. While weak productivity growth remains a concern, the likelihood of a major labour-market shock is deemed remote.
Resilience and challenges in Euro-area
“The euro-area labour market has shown impressive resilience since the COVID-19 pandemic. Despite various economic shocks and increasing competition from abroad, unemployment is almost a full percentage point below its pre-COVID trough.”
“However, labour-market resilience has compounded Europe’s long-running productivity problem. Recent data suggest a more balanced labour market in recent quarters: employment growth is slowing, the vacancy rate is now back below the pre-COVID peak and wage growth is moderating.”
“We think a major loosening of the euro-area labour market is unlikely, but if trade pressures squeeze European firms’ profit margins this could limit incentives to boost employment and hoard labour to the degree that we have observed since COVID.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Source: https://www.fxstreet.com/news/euro-area-labour-market-resilience-amid-challenges-standard-chartered-202601271958
