Unemployment, inflation: encouraging news but confirmed … – Liberation

The euro area recorded encouraging news Tuesday, with both lower unemployment and inflation takes a few colors, evidence that the massive debt buyback policy by the ECB to bear fruit, but economists remain cautious . until the trend continues

While inflation remained negative for the fourth consecutive month in March, but deflation fears now seem to get away: the annual rate at -0, 1% according to preliminary estimates released Tuesday, reported a sharp slowdown in the price decline after -0.3% in February and -0.6% in January.

A good point for the European Central Bank says Teunis Brosens, of ING Bank. To counter the risk of deflation, marked by a sustained fall in prices and wages that weighs on the economic recovery, the ECB began in early March a vast program of quantitative easing, or “QE”, which provides for the repurchase of more than 1,000 billion of public and private debt securities by September 2016.

“The ECB intervened effectively before the anticipated decline in inflation has time to turn into a deflationary trend in wages and prices and spread to the real economy, “according to Mr. Brosens. It is expected that energy prices have less and less to decline over the next few months and that inflation again become positive “soon.”

As for unemployment, the rate was down to 11.3% in February in the euro area, the lowest since May 2012. In February, 18,204,000 people were unemployed in the monetary union, a decrease of 49,000 over one month and to 643,000 over the year.

A new “fairly encouraging,” said Howard Archer of IHS Global Insight, which notes in particular that “the decrease from 329,000 unemployed from December to February is the most important over three months since April 2007 “

-. Need stimulants –

For him,” the euro area labor market has clearly improved growth in the first quarter 2015 “, besides” economic confidence has recently improved in all areas. “

But for economists, these encouraging trends do not mean that all the lights are green, far s ‘from it.

While unemployment has declined, but the European office of Eurostat also revised upwards, thanks to statistical revisions, the rate in January, now at 11.4 % versus 11.2% previously.

In general, “it remains historically high”, also tempers Jonathan Loynes of Capital Economics.

As for inflation It owes its evolution from March wholeheartedly to the evolution of its most volatile components: energy prices and food. The underlying inflation favored by economists as more representative of a trend, “fell from 0.7% to 0.6%, reaching a record low” says Jonathan Loynes.

“In general, among the recent signs of a slightly better growth”, the figures released Tuesday “a reminder that the euro area remains in a very fragile state, marked by high unemployment and very low pressure on prices, “said Jonathan Loynes.

” Clearly, the economy of the euro area still needs stimulants of any kind, whether from Frankfurt in the form of QE or in national capitals forms of reforms favorable to growth “says his side Teunis Brosens.