German unemployment fell by more than expected in December, and Spanish jobs numbers looked better too. But as David Pollard reports, there are plenty potential problems ahead for Europe, including inflation and China's slowdown.
Christmas comes late in Spain. The most important feast for many, The Kings - yet to happen. But a busy festive season is already showing through in jobless numbers. They're down in December - though that still leaves over four million out of work. Things are better in Germany - it's still enjoying a record low rate of 6.3 per cent. Admiral Markets, Darren Sinden. (SOUNDBITE) (English): DARREN SINDEN, MARKET COMMENTATOR, ADMIRAL MARKETS, SAYING: "If you prop German unemployment against the rest of the euro zone, you can see that they diverge dramatically. When you look to economies like Spain, where unemployment is still above 20 per cent, and you look at the headline rate across the euro zone, there's clearly a lot of work to do for the rest of the single market." As for hopes that low-to-no inflation had been consigned to last year - think again. Euro zone prices rose just 0.2 per cent on the year last month. Italy's monthly rate was negative. Both figures disappointing forecasts - and, no doubt, the ECB. (SOUNDBITE) (English): DARREN SINDEN, MARKET COMMENTATOR, ADMIRAL MARKETS, SAYING: "Many central bankers are scratching their head about what they can do about continuously falling prices like oil and other commodities which have a drag on inflation in their economies, and it's not clear without some significant fiscal stimulus, what these major economies can do to stimulate inflation." After Monday's manufacturing PMI data came in at a 20-month high for the euro zone, it appears then, to be a case of New Year, but familiar mixed signals. One economist saying this year could be a rerun of 2015, only with added risks.