The Italian unemployment rate was notably below consensus in July, at 6.5% (vs 7.0% cons, a one tenth downwardly revised 6.9% prior). This saw the 3mma of the unemployment rate (which smooths out some of the monthly volatility) fall for a tenth consecutive month to 6.7% (vs 6.8% prior). 

• Some of the fall in the unemployment rate can be accounted for by an increase in inactive persons (the inactivity rate ticked up to 33.3% vs 33.1% prior), though the employment rate also ticked up to 62.3% (vs 62.2% prior).
• On a 3m/3m basis, employment growth was 0.3% in July, down from a 0.5-0.6% pace the three months prior, but still above the 2011-2019 average of 0.1%.
• Looking ahead, the EC’s expected employment indicator remains in expansionary territory (rising to 104.1 in August vs 102.9 prior), although the labour hoarding indicator ticked up to its highest since February in the latest readings.
• Final Q2 GDP is due on Monday, which will include the first breakdown of the contributors to the 0.2% Q/Q print. The flash release noted that domestic demand was a positive contributor in Q2. This may have been driven by consumption, which is being supported by a resilient labour market.