Seasonally adjusted employment:

4Q 2010: +0.1% q/q, +0.3% y/y

MNI survey median: +0.1% q/q, +0.2% y/y
MNI survey range: flat to +0.4% q/q

3Q 2010: flat q/q (unrevised)
2Q 2010: +0.1% q/q (unrevised)
1Q 2010: flat q/q (unrevised)
—

PARIS (MNI) – Much as expected, employment in the Eurozone began
expanding again in final months of last year, as ongoing hiring in the
services outweighed further downsizing in industry and construction,
Eurostat said Tuesday.

Employment increased by roughly 200,000 or 0.1% in 4Q to 144.8
million. This was some 400,000 above the trough at the start of last
year, but 3.4 million fewer than at the pre-crisis peak in the spring of
2008.

The number of people without work declined in 4Q by a net 88,000 to
15.85 million, trimming the jobless rate by 0.1 point to 10.0%, Eurostat
estimated early this month.

Across sectors, payrolls increased in 4Q by 0.3% in the categories
of trade, transport and communication; in financial and business
services; and in other services. They also rose by 0.5% in agriculture.
Employment was down 0.1% in industry and 0.9% lower in construction.

Most reporting countries posted job gains in 4Q, led by Austria
(+0.6%), Italy and Slovakia (both +0.4%) and Belgium (+0.3%). Germany
and France were neck and neck (+0.2%). Further job losses were sustained
in Spain (-0.3%) and Slovenia (-0.7%), while Finland suffered a modest
setback (-0.1%) following several quarters of gains.

After the severe losses during the recession, the Eurozone labor
market now appears to be on the mend. Unemployment declined further by
72,000 in January, knocking another 0.1 point from the jobless rate.

However, given prospects for moderate economic growth, there is
little reason to expect a pick-up in hiring strong enough in the coming
months to bring unemployment down rapidly. This will continue to weigh
on wages and consumption for some time.

In its interim economic outlook released this month, the European
Commission sounded cautiously optimistic on the labor market: “With the
recovery continuing on a solid footing, improvements are expected for
the period ahead,” it said. “But improvements will be moderate and
unevenly distributed, in particular with gains in Germany and a
continuation of the difficult situation in Spain.”

As industry is benefitting from robust foreign demand, short-term
indicators here are most promising for employment. The PMI polls show a
gradual pick-up in factory hiring since summer, while jobs gains in the
services have been more sluggish. The Eurozone composite PMI employment
index rose 1.2 points in February to 53.3 — the second-largest gain in
the past 10 months of expansion.

According to the PMI report, “Jobs growth was again centered on
Germany and France, but also broadened following a slight increase in
Italy for the first time in three months. Spain and Ireland reported
further job losses, although rates of decline eased in both cases.”

The Commission’s latest business survey signaled improved hiring
prospects in all main sectors except for construction. Manufacturing
employment expectations reached a record high in February thanks to
Germany and were above average everywhere except for Greece and Cyprus.
In the services and retailing, by contrast, there has been little
significant net change in recent months.

–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com

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