BRUSSELS (Reuters) - The unemployment rate in the euro zone dropped in August to its lowest in more than 11 years, official data showed on Monday, as services appeared to offset weakening industry, an encouraging sign for the region’s growth.
The jobless rate in the 19-country euro zone fell to 7.4%, the European Union statistics agency said, its lowest since May 2008 when the euro zone’s economy began to suffer from the subprime mortgage crisis in the United States.
The drop from 7.5% in July prolonged a decline begun in August 2014 when unemployment was at 11.5%. Since then, the rate has fallen or has remained stable every month for five years. It also defied market forecasts that the unemployment rate remained unchanged from July.
The euro zone’s economic growth has been slowing, mostly because of falling industrial output over global trade tensions. The unemployment reading partly allayed fears the manufacturing slowdown would spill over into the larger services sector.
“This comes as a relief and gives time to the service sector to continue to grow even though the decline in manufacturing production is worsening,” ING economist Bert Colijn said.
Last week, a European Commission confidence indicator showed morale in services rose in September after three consecutive monthly declines . Lower unemployment should push up salaries and consumer spending, thus helping economic growth.
The jobless rate fell in August in the countries where it is highest, a sign that economic differences among countries are shrinking, although they remain wide.
In Spain, the unemployment fell to 13.8% in August from 13.9% in July. In Italy it went down to 9.5% from 9.8%. In Greece, the country with the highest rate, it dropped to 17.0% in June, the last month for which data are available there.
In Germany, the euro zone’s largest economy, the rate was stable at 3.1% in August. The actual number of people out of work in Germany dropped by 7,000, a minor change that did not affect the rate.
Reporting by Francesco Guarascio @fraguarascio; editing by Larry King