EURCAD Euro vs Canadian Dollar

Eurozone unemployment rate unexpectedly dropped in July to its lowest level in three-and-a-half years, adding to hopes that consumer spending would support growth amid low inflation.

The unemployment rate fell to 10.9 percent in July, after holding steady at 11.1 percent in the previous two months, data from Eurostat revealed Tuesday. The figure was expected to remain at the 11.1 percent level for a fourth straight month.

The latest jobless rate is the lowest since February 2012, when it was also 10.9 percent. In January that year, the figure was 10.7 percent.

The number of unemployed decreased by 213,000 from June to 17.532 million in July.

IHS Global Insight Economist Howard Archer said the labor market has been helped by the Eurozone sustaining modest growth since the fourth quarter of 2014, while business confidence has firmed appreciably overall during 2015 so far with gains in all sectors.

Data offered hope that the slow recovery in the region's labor market has not gone into reverse, Jessica Hinds at Capital Economics, said. But the bigger picture is that unemployment remains too high to boost wage growth and inflation.

The youth unemployment rate slid to 21.9 percent in the 19-nation bloc from 23.8 percent last year. In June, the rate was 22.3 percent.

The EU28 unemployment rate also fell in July, down to 9.5 percent from 9.6 percent in June. It was the lowest rate since June 2011, Eurostat said.

The overall positive data for euro area mask divergence between member countries. In Germany, the unemployment rate was unchanged at its lowest level since reunification.

According to the Federal Labor Agency, the German jobless rate held steady at 6.4 percent in August. The number of unemployed declined by 7,000 to 2.79 million. Economists had forecast a decline of 4,000 for August, after rising 8,000 in July.

Elsewhere, Italy's jobless rate dropped to the lowest level in nearly two-and-a-half years in July. The seasonally adjusted unemployment rate fell to 12.0 percent in July from 12.5 percent in the previous month, the statistical office Istat reported.

A similar rate of 12 percent was last seen in July 2013 and a figure lower was registered in February 2013, when it marked 11.9 percent.

The number of unemployed people decreased by 217,000 in July from last year.

The youth unemployment rate in Italy declined to 40.5 percent in July from 43.1 percent in June. It was the lowest youth jobless rate since July 2013, when it was 39.9 percent.

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