Employment growth continues to be driven in particular by improved recent labour market performances in Germany and Poland, and continuing firm employment growth in Spain. At the same time, strong employment expansion continues in most of the new Member States (with the exception of Hungary).
Reflecting the improvement in labour market conditions, by the third quarter of 2007, the overall EU employment rate had increased to 66%, up from 65% one year earlier. The employment rate in Poland (up 2.2 percentage points on the year) is now rapidly approaching the rate in Italy.
Unemployment rates have fallen to levels not seen since the early 1990s. The average EU unemployment rate recorded yet another drop in the fourth quarter of 2007 to reach 6.9%, down from 7.7% a year earlier. The decline in the EU aggregate reflects continuing strong falls in the unemployment rate in Poland (down 3.8 percentage points) and in Germany (down 1.6 pp), but also in France (down 1 pp).
On the downside, growth in hourly labour costs has tended to pick up in the EU over 2006 and 2007, rising to an annual rate of 3.7% in nominal terms in the third quarter of 2007 and reflecting strong wage increases in new Member States. However, in contrast, there has been continued wage moderation in Germany.
Recent developments, such as heightened turbulence in the financial markets, may result in the global macroeconomic outlook deteriorating further, although the impact on Europe has been so far limited, with private consumption still holding up well due to the underlying steady improvement in the labour market.
