Suddenly, the good news came from the Euro zone, where unemployment has fallen to its lowest level since August 2011 and now is 10.3%. Moreover, in a bulk, the Europe-wide unemployment rate is 8.9%. However, for the most part all these figures are the average temperature in the hospital, because in Greece and Spain, unemployment is still above 20%, the rate in Germany is at a record low at 6.2%.
Another problem is the high youth unemployment. In Greece and Spain, this rate is still very high - 48% and 45%, respectively. Many Spanish went in other European countries searching for job, but the majority remained in Spain surviving on short-term contracts. This situation leads to the fact that during the years of crisis, a new generation of unemployed has grown, which is extremely difficult to integrate into society.
In general, over the last few years the Spanish economy has made significant progress in the creation of new jobs, without it the situation would be just catastrophic. Recent PMI data point to a continuation of the economic recovery, which added 3.2% in 2015. However, in the current year, growth may slow, because to some extent last year's dynamic was provided by the postponed demand of consumers and businesses.
It is not easy with the reduction of the budget deficit, which was 4.5% at the planned target by 4.2% in 2015. This year the situation is more difficult, because the European Commission forecasts a deficit of 3.6%, but only 2.8% is planned. The whole affair is whether in Brussels will agree for an additional year to achieve the goals to bring the deficit in line with EC regulations.
By hard adventure, the Spanish political parties for several months cannot form a coalition after the elections held on December 20th. Now it is time for new elections, which will held in June. That means that so needed labor market reforms will be postponed again. On this background, the consumer confidence index is already beginning to sink, but that the household expenses who were the main driver of last year's recovery.
In the short term, quiet news background can send Euro-Dollar pair in the correction, provided that the ADP forecast data of number of job position will be, with no surprise, at 190-185k. However, in general, the further decline of the currency pair on a background of expectations of good statistics on the US labor market and further easing of the monetary policy of the ECB market are probable.