New jobs are likely to remain hard to find in the euro zone with the exception of Germany at least during the first half of the year as employers continue to tread carefully, Francois Cabau, an analyst at Barclays Capital, wrote in a research note.
Leland Bobbe | Stone | Getty Images
Data from the European Union's statistics office, Eurostat, showed that employment in the euro zone fell by 0.2 percent in the fourth quarter of last year compared with the third quarter, a slower decrease than the 0.3 percent predicted by Barclays Capital.
However, Cabau pointed out that this was already the second consecutive quarter of contraction in employment, while gross domestic product in the 17 countries that make up the euro zone fell into negative territory in the fourth quarter for the first time since the second quarter of 2009.
"Looking ahead, our hiring intention indicators continue to show ongoing weakness in all countries apart from Germany where it has stabilized at fairly high levels," Cabau wrote.
"In the other countries, the pace of deterioration has continued to be fairly steep since the beginning of the year and therefore does not bode well for future employment prospects," he added.
Barclays Capital expects employment in the euro zone to continue falling in the first half of the year, and it does not expect the economy to return to growth before the second half of the year.
Companies went through "extreme adjusting" because of "the suddenness of the 2008 systemic shock that pushed the global economy into recession in 2009," according to Cabau.
Uncertainty around euro zone periphery countries—especially Greece, which was seen by many as potentially the next systemic shock to shake the economy—has contributed to weak confidence, he said.
"These business leaders had only freshly recovered from the 2008/2009 crisis, and their adjustment was made more difficult because they could not anticipate it," Cabau wrote. "We believe that as soon as overall business confidence started to fall and uncertainty and financial stress coincidentally rose in April/May 2011, they looked to adjust their staffing levels quickly."
In the fourth quarter of last year, employment in Portugal saw its greatest ever decline quarter-to-quarter, of 2.7 percent, followed by Spain, where it fell by 1 percent. Greek and Irish data were not released.
Among sectors, the construction, trade, travel and food services sectors contributed the most to the overall drop in employment, according to the Barclays Capital calculations.