Firms across the eurozone slowed hiring in the second quarter (2Q) amid mounting signs of economic weakness.
 
Employment grew 0.2% in 2Q after 0.3% in the previous three months. Total output in the 20-nation economy increased 0.3% in the same period - despite a disappointing industry performance in June.

The euro economy has sent distress signals recently, with consumers unwilling to spend despite outsized wage increases, private-sector activity grinding to a halt, and confidence in its largest member - Germany - tanking. 

Such gloom, paired with the recent market selloff, has left traders betting on faster monetary easing from the European Central Bank (ECB). Markets are fully pricing two more interest-rate cuts this year and see an 80% chance of a third, a significant change from just a few weeks ago, when policymakers were wondering whether there was only room for one additional quarter-point step.

Eurostat confirmed its initial estimate for economic growth in the three months through June. A detailed breakdown will be available on Sept 6. 

A separate report showed that June’s 0.1% drop in industrial production from the previous month was exclusively due to a slump in non-durable consumer goods. Readings for April and May were revised down.

Output increased in the region’s four largest economies but plunged in countries including the Baltics, Belgium and Ireland.

The drop in production is “nothing to panic about”, said Maeva Cousin of Bloomberg Economics. “We saw it coming and know it was mostly driven by a sharp drop in volatile Irish numbers.”

Excluding Ireland, output is up 0.7% on the month, she said.

“Even so, industry remains weak and shows little sign of bouncing back,” Cousin said. “It likely weighed on growth slightly again in the second quarter and may do so in the third quarter as well.”

  - Bloomberg