Eurozone employment rose by 0.2% quarter-on-quarter in the fourth quarter. This was above the 0.1% gain expected.
The release shows that eurozone employment grew faster than forecast. No other figures were included in the update.
The fourth-quarter 2025 employment result is stronger than we expected. Growth of 0.2% beat the 0.1% consensus and points to a resilient eurozone labour market. This pushes back against the widely held view that a sharp slowdown was already underway and fully priced in.
Stronger data like this gives the European Central Bank less reason to cut rates soon. We should now assign a higher chance that rates stay elevated through the second quarter of 2026. This matters even more because January core inflation was still high at 2.4%, well above the ECB’s target.
This setup should support the euro against the US dollar. Buying near-term EUR/USD call options could be a practical way to position for upside. We saw a similar move in late 2025, when stronger inflation data lifted the exchange rate by about 1.5% over two weeks.
For equity indices like the Euro Stoxx 50, the picture is mixed. A solid economy helps earnings, but “higher for longer” rates are a headwind and may limit upside. Traders could consider selling out-of-the-money calls to collect premium, positioning for a range-bound market rather than a breakout.
The clearest reaction may be in rates. We should expect German Bund futures to sell off as markets price a more hawkish ECB. This fits with last month’s data showing the eurozone narrowly avoided a technical recession, supporting the view that the economy can handle current rate levels.
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