Robotic arms used in the Volkswagen factory in Wolfsburg, Germany. The arms are manufactured by KUKA AG, which announced 350 job cuts in March. Photo: Sean Gallup/Getty Images By Paul Hannon Updated June 23, 2019 6:02 pm ET A steady rise in employment has been one of the eurozone’s big successes over the past six years of economic expansion. But there are signs the region’s job market may be cooling as manufacturers cut back on hiring in response to weaker global demand for their exports.
Between the collapse of Lehman Brothers in September 2008—when the financial crisis truly went global—and the eurozone’s return to economic growth in the second quarter of 2013, the currency area lost 6.7 million jobs, according to the European Union’s statistics agency. But more recently, there are signs that the long decline in unemployment is coming to an end. Purchasing managers at eurozone manufacturers reported cutting their payrolls in May and adding to them only slightly in June, responding to a long period of weakening new orders, particularly from abroad. As recently as the first quarter, manufacturers had expanded their payrolls by 1.3% from a year earlier.
Germany is one of those countries, having suffered significantly from what has more recently become a global slowdown in manufacturing. That partly reflects its role as a supplier of tools and equipment to factories around the world, including China. Tensions between the U.S. and its largest trading partners have caused uncertainty about where to locate production to avoid new tariffs. That is weakening business investment around the world, according to the World Bank.
Other surveys point in the same direction, including a monthly poll by the European Commission that found hiring intentions at manufacturers were at their weakest in almost three years during May. Back in early 2008, Spain had the highest unemployment at 9.5%, while the Netherlands boasted the lowest at 3.6%. Eleven years later, the difference between the highest and lowest rates is two-and-a-half times wider. And that gap is widest among younger workers. While Germans under the age of 25 face a jobless rate of 5.6%, their Spanish, Italian and Greek counterparts have a one-in-three chance of being jobless.