ECB employment recovers at pace - but productivity is lagging

The bloc is expected to experience sustained low economic growth...

ECB employment recovers at pace - but productivity is lagging

Rui Roda, Flickr

The European Central Bank's latest economic bulletin has some mixed news for the bloc.

Employment is rebounding ahead of target - but productivity is falling and Euro countries could be facing a prolonged period of low economic growth.

Real GDP in the eurozone is projected to increase by 1.7% in 2016, and 1.6% in both 2017 and 2018.

"Economic recovery in the euro area is expected to be dampened by still subdued foreign demand – partly related to the uncertainties following the UK referendum outcome," the report states - although it adds that it believes that the eurozone has shown resilience to economic shocks.

It also suggests that controversial economic reform programmes have helped the labour force to recover.

The ECB notes that people are getting back to work at a quicker than expected speed following the recession and that this is fueled by an increase in the popularity of part-time work and growth in the service sector.

"Stronger employment growth has doubtless provided support to household incomes, but has also further weakened aggregate productivity growth, which was already notably weaker - even at the sectoral level - than in the pre-crisis period on both sides of the Atlantic," the ECB cautioned, adding that, "These common trends in productivity growth may imply risks to the long-term growth outlook."

Two-thirds of the jobs gained since mid-2013 have been in Spain and Germany.