EU unemployment falls to record low, but producer prices soar on rising energy cost
The Eurozone unemployment fell to 6.8% of the workforce in January from 7.0% in December and also beat the expectations for a drop to 6.9%, hitting the record low of the bloc of 19 countries sharing the Euro.
Drop in unemployment signals that the unions’ economy continues to rebound from the pandemic slump, but positive impact was partially offset by surge in industrial producer prices.
The prices at factory gates surged 5.2% on a monthly basis in January from 3.0% previous month and more than double forecasts, while annualized figure showed rise by 30.6% in January, following 26.3% increase in December and above 26.9% forecast.
The record rise in producers price comes from soaring energy prices, as gas and oil prices rose 11.6% on monthly basis, with annual increase of 85.6%, as energy prices started to surge on fears before Russia invaded Ukraine.
Unexpectedly strong rise in producer prices would hurt economic activity and slow the growth, in addition to high uncertainty over the war in Ukraine and the impact of sanctions imposed to Russia, as the EU is heavily dependent on Russian oil and gas, as well as raw materials.
Strong figures would also bring an additional headache to the European Central Bank, as this also contributes to the factors that lift the inflation, which currently stands at a record 5.8%, almost three-times above central bank’s 2% target and expected to accelerate further.