The eurozone labour market has defied expectations, maintaining historically low unemployment rates despite a sluggish economic performance in the final quarter of 2024. According to provisional estimates from Eurostat, the overall EU unemployment rate stood at 5.8% in January 2025, while the broader eurozone figure was 6.2%. These figures represent a continuation of a four-month streak of low unemployment, even as the region grapples with a tepid GDP performance.
Employment figures in January showed modest improvements, with 8,000 fewer individuals jobless compared to the previous month in the EU. In the eurozone, job creation was robust, with 42,000 new positions, bringing the total number of unemployed to 10.765 million. However, the youth unemployment rate remains a concern, with 14.6% of young job-seekers across the EU and 14.1% in the eurozone still out of work.
Among EU member states, Spain is showing signs of recovery. The country’s unemployment rate dropped slightly from 10.6% in December 2024 to 10.4% in January 2025, and February data from Spain’s Ministry of Labour indicate an even more encouraging trend the lowest monthly unemployment figures in 17 years. In contrast, countries like the Czech Republic and Poland continue to outperform, registering the lowest overall unemployment rates at 2.6% in January.
Despite these positive signs, there is growing concern that the unemployment rate could rise in the coming months. Recent Purchasing Managers' Index (PMI) data from S&P Global indicate that manufacturing sectors have been cutting jobs at the fastest rate in four and a half years. Additionally, potential impacts from threatened US trade tariffs on the EU’s economy add further uncertainty to the labour market outlook.
The European Commission’s latest forecast suggests that unemployment in the EU will average 5.9% in 2025, with the eurozone rate expected to settle at around 6.3%. These projections are critical, as the unemployment rate is a key indicator influencing the European Central Bank’s monetary policy decisions. With the ECB’s next meeting scheduled for this Thursday, a further cut in key interest rates including a reduction in the deposit rate from 2.75% to 2.5% is widely anticipated to support the economic recovery.
