Employment hopes as firms in EU step up hiring

Eurozone companies stepped up hiring as manufacturing and services activity from Germany to Spain expanded faster than economists estimated.

Employment hopes as firms in EU step up hiring

A gauge of employment in both industries rose in January to a level not exceeded since mid-2011, data from London-based Markit Economics showed on Wednesday.

A Purchasing Managers’ Index increased to 52.6 from 51.4 in December, exceeding a January 23 preliminary reading of 52.2.

Measures for Germany, Italy and Spain signalled accelerating growth, while French output shrank for a ninth month.

The 19-nation euro economy is set to benefit from a decline in oil prices and a weaker euro just as the ECB embarks on a €1.1 trillion quantitative-easing programme to fight the risk of deflation.

Anticipation of large-scale purchases of sovereign debt boosted business confidence in January after unemployment declined for the first time in four months.

The rate of job creation is “adding to signs of increasing optimism among employers about the year ahead,” said Chris Williamson, chief economist at Markit.

“The survey data are running at a level consistent with gross domestic product rising by 0.3% in the first quarter, and the move to full-scale quantitative easing by the ECB should help drive even stronger growth in coming months.”

The eurozone economy expanded 0.2% in the third quarter, and economists in Bloomberg’s monthly survey predict the same rate of growth for the final three months of 2014. Eurostat will release GDP data on February 13.

A measure of activity in the service industry rose to 52.7 in January from 51.6 in December, Markit said. That compares with an initial estimate of 52.3.

On Monday, a gauge of manufacturing activity was confirmed at 51. A reading above 50 indicates expansion.

Joblessness in the currency bloc fell to 11.4% in December, down from a record 12% recorded in most of 2013.

Stubbornly high unemployment fuelled the success of anti-austerity party Syriza in Greek elections last month and is seen as a key reason for the support of populist movements from Germany to Spain.

With new orders accelerating and companies’ backlog of work stabilizing, the region’s labour market might be approaching a turning point, Markit said. The rate of job creation was the fastest in more than seven years in Spain, and a similar gauge for Germany rose to an 11-month high.

At the same time, further job losses were registered in both France and Italy. “Spain and Ireland are the stand-out performers, both in terms of the pace of economic growth and hiring signaled by the survey data,” Williamson said.

More in this section

News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up