France's unemployment rate fell to its lowest level in five years during the second quarter, boosting President Emmanuel Macron as he pushes through reforms to ease employment regulations. As Sonia Legg reports, Germany's employment hit a record too and euro zone core inflation rose, possibly increasing the chances of ECB policy tapering sooner rather than later.
It's been in Germany's economic shadow for years so a fall in the unemployment rate to a five-year low was a boost for France. The 9.5 percent figure followed data last week suggesting private sector job growth accelerated at its fastest rate for six years. SOUNDBITE (English) CITY INDEX MARKET ANALYST, KEN ODELUGA, SAYING: "Really any sort of developed economy in the world would actually regard that as still quite a bit of a problem. I don't think that in France anyone's really about to break out in applause." Germany also took the breeze out of France's sails. Its employment rate hit the highest level since reunification in 1990. Almost half a million jobs were added in the second quarter and 44.2 million people were in work. Emmanuel Macron though may breathe a quiet sigh of relief. The French President's about to embark on widespread labour reforms. SOUNDBITE (English) CITY INDEX MARKET ANALYST, KEN ODELUGA, SAYING: "His approval ratings remain quite resilient, quite strong. There's every reason to expect that he could get through a lot more of the reforms than some people expect." Where this all leaves ECB policy is the key question. Euro zone inflation - excluding food and energy - rose slightly in July to 1.3 per cent. SOUNDBITE (English) CITY INDEX MARKET ANALYST, KEN ODELUGA, SAYING: "I think we will get that tapering announcement, probably in September, very latest November. But I think that the central bank has felt cautioned by the pullback of the stock markets and maybe a little bit by the pullback in earnings growth." And it didn't go all Germany's way either - the number of home building permits fell in the first half of the year. The sector is a key driver of economic expansion.