Euro area unemployment unlikely to intensify

Euro area labor market data shows downward trend of the unemployment rate in September that started in mid 2013. It is inappropriate to annticipate the unemployment rate based on only consumer expectations about future labour market dynamics 

The decomposition of the EC consumer confidence indicator shows in above Figure, the rebound that started at the end of 2014 has been primarily led by improving expectations about labour market developments and to a lesser extent by future economic conditions.

"In all, against the backdrop of growth-friendly factors still supporting domestic demand, the latest set of consumer confidence data suggests that risks surrounding their forecast for private consumption look balanced. Although largely unjustified at the current stage of the economic recovery, fears that labour market distress may re-intensify over the next 12 months could spur precautionary savings and slow household spending", says Barclays. 

Whereas, the economy's September labour market data suggests that the suspection about labor market displace may be wrong given the continuation of the unemployment rate's downward trend that started in mid 2013.