Euro-area unemployment unexpectedly declined in October to the lowest level in more than seven years, signaling that companies are confident in the region’s slow but steady recovery.

The joblessness fell to 9.8 percent from a revised 9.9 percent in September, the European Union’s statistics office in Luxembourg said on Thursday. That’s the lowest since July 2009. Economists in a Bloomberg survey predicted the rate would remain unchanged at a previously reported 10 percent.

The faster-than-anticipated decline in unemployment comes as European Central Bank officials urge governments to step up efforts to encourage job creation and strengthen economic resilience in the region. With inflation still well below their target of just under 2 percent, policy makers are considering whether and how to extend a bond-purchase program beyond its scheduled end in March. The Governing Council holds its next meeting on Dec. 8.

“Improving labor markets are key if eurozone consumers are to make a solid contribution to growth over the coming months, especially as gradually rising inflation is likely to eat into purchasing power,” said Howard Archer, chief European economist at IHS Global Insight in London.

ECB President Mario Draghi renewed his call for economic adjustments in a speech on Wednesday in Madrid, arguing that monetary policy is providing “support and space” for change. “It is up to euro-area governments to act, individually at national level as well as jointly at European level,” he said.

Manufacturing, Inflation

Industrial output in the 19-nation region expanded at its strongest pace in almost three years in November as a decline in the euro and improved business conditions helped counter geopolitical uncertainties. A Purchasing Managers’ Index for manufacturing rose to 53.7 from 53.5 in October, IHS Markit said on Thursday.

Data this week also showed that euro-area inflation accelerated to 0.6 percent in November, the fastest pace in more than 2 years. An index of economic confidence increased to the highest level this year.

Unemployment in Germany stood at 4.1 percent in October, while in Spain, 19.2 percent of workers were out of a job.

Source: Bloomberg