Eurozone Job Growth Reaches Nine-Year High

The economy of the 19 countries that use the euro got off to a strong start in 2017 even as inflation pressures continue to mount in the wake of the recent rise in oil prices, a closely watched survey showed Friday.

Financial information company IHS Markit said its gauge of business activity across the manufacturing and services sectors held steady at a five-and-a-half-year high of 54.4 points in January, still way above the 50 threshold between expansion and contraction. Encouragingly, the index’s gauge of job creation spiked to a near nine-year high, AP reported.

The firm said the recovery remains broad-based across the eurozone, but that it was particularly strong in Ireland, Spain and France.

The survey comes hot on the heels of figures showing the eurozone economy expanded by a healthy 0.5% quarterly tick in the final three months of the year and several other indicators pointing to a pick-up in activity.

Separate figures released Friday by the European Union’s statistics agency showing a 0.3% monthly decline in retail sales in December did little to alter that view. Over the fourth quarter as a whole, retail sales were still up a healthy 0.8%.

IHS Markit said its survey points to a quarterly growth rate to 0.4% and that it anticipates further “robust” growth over the year, not least because of the improving jobs backdrop. Figures earlier this week showed unemployment across the region dropped to 9.6%, its lowest level since May 2009, before a financial implosion in Greece that year set off a debt crisis that almost shattered the eurozone.

“With jobs being created at the fastest rate since the global financial crisis, it certainly seems that companies are looking to expand and are not overly concerned about how business might be affected by political uncertainty,” said Chris Williamson, chief business economist at IHS Markit.

The eurozone faces a number of political challenges this year that could potentially derail the economy’s recovery. They include uncertainty over whether President Donald Trump ushers in a new age of trade protectionism, the start of Britain’s withdrawal from the European Union and elections in Germany and France, among others.

“There remains a significant risk of political events subduing or even derailing the upturn, meaning we retain a cautious outlook for the eurozone, with GDP likely to rise by only 1.5% this year,” Williamson said.

  World Economy

The world economy is also set to maintain a solid level of growth in 2017, but the deficit will continue to be a problem, according to the ESADE 2017 Economy Report published on Thursday by the business school and Banco Sabadell. 

The report, which also looks at the possible effects of Brexit and the election of Donald Trump as US president, predicts higher growth in developing nations, which can expect to see their economies expand by an average of 4.5%, Xinhua reported. 

India is expected to see a 7% growth, and a 6.5% growth is predicted for China in the coming years. 

Meanwhile, developed nations can expect their economies to expand by slightly under 2%, with the United States predicted to grow slightly over 2% and Britain, somewhere just below that figure. 

Brazil and Russia can also hope for an upturn in fortunes after some difficult years. Spain will see its economy continue to expand at around 2%, slightly below the growth witnessed in 2016. 

While in Latin America, Peru, Bolivia and Colombia can await expansion of between 3% and 4%, with Chile and Mexico slightly below at 3%. 

Finally, ESADE predicted a “neutral” fiscal policy between 2017 and 2018 with the level of public debt slowly falling to a level of 87% of gross domestic product, as opposed to the 90.3% in 2013. 

This should be possible as the result of falling interest rates, although the debt levels of some nations will limit their fiscal policies.