Euro area jobless rate continues to drop in December, likely to fall to about 8 pct by end-2018

Euro area economic news continues to be extremely positive, with all data still pointing to very solid momentum heading towards the end of 2017. The data released today indicated that the headline jobless rate in the currency bloc dropped in November for a fourth straight month to 8.7 percent, a level seen at the beginning of 2009 and over a percentage point lower compared to a year earlier.

Looking at the detail, the jobless rate dropped in each of the three biggest member states. Unemployment rate fell to 3.6 percent in Germany, to 9.2 percent in France and 11 percent in Italy. But while this implies that spare capacity is being used up, the amount of slack in the labor market seeps to remain ample, noted Daiwa Capital Markets Research.

Meanwhile, underemployment levels continue to be well above those prevailing before the financial crisis. As the economic growth continues, and recent labor market reforms continue to take effect, a stable flow of inactive workers is expected to return to the labor force, which might act to decelerate the rate of decline in the jobless rate, stated Daiwa Capital Markets Research.

However, given that economic surveys continue to suggest a very positive outlook for the labor market, the euro area jobless rate is expected to drop to about 8 percent by the end of this year.

At 20:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bearish -63.5764, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 66.322. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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