A tight labor market will mitigate the social impact of the eurozone's economic downturn in the first half of 2023 but may limit the currency area's recovery in the second half. Despite the economic shocks brought on by the war in Ukraine throughout 2022, labor markets across the eurozone remain exceptionally tight. Unemployment has remained stable or has fallen in most eurozone countries throughout 2022, and is currently very low across all major economies in the monetary union including Italy, France, Spain, and Germany. The jobless rate in the eurozone hit a record low of 6.5% in October, with employment rising despite sluggish growth and a downturn in global business activity in the last quarter of 2022 and a looming recession for the first quarter of 2023. Data from the S&P Global purchasing managers index (PMI) published on Jan. 2 showed that even manufacturing companies in the region continued hiring...
