German unemployment rises steadily
Published on: 30 Oct 2012 14:36 CET
The jobless rate, both in raw and seasonally adjusted terms, was unchanged in October from September, the Federal Labour Agency said in a statement.
In raw or unadjusted terms, the jobless rate was steady at 6.5 percent and in seasonally adjusted terms – which irons out usual seasonal fluctuations – it stood at 6.9 percent. The basic numbers showed diverging trends.
The total number of people registered as unemployed was down in raw or unadjusted terms, fell by 34,889 to 2.753 million.
But in seasonally adjusted terms, the jobless total rose by 20,000 to 2.937 million, as Europe's recession increasingly makes itself felt in the region's top economy.
"So far, the German economy remains on a shallow growth path, despite the unfavourable conditions," said agency chief Frank Weise.
"The labour market has so far remained comparatively robust to the deterioration in the economy. But the negative effects are there. As the year-end approaches, it will become more difficult for Germany to remain untouched by Europe's recession," Weise said.
Analysts, too, said the German labour market appeared finally be to running out steam.
"The 'labour market miracle' many observers had proclaimed is likely to continue taking a breather for now, in view of the poor economy," said Commerzbank economist Eckart Tuchtfeld.
"Only in the second half of 2013 do we expect the trend to point up again."
Berenberg Bank economist Christian Schulz agreed. "Unemployment could rise further over the next few months, given that the labour market usually reacts to the economic cycle with a lag.
"The downtrend will probably only resume once the economy leaves the current period of stagnation and starts growing again early next year," he said.
ING Belgium economist Carsten Brzeski pointed out that the strong labour market had been one of the main drivers of German growth in the first half of the year.
"Looking ahead, however, it is doubtful whether private consumption can really take over the baton as main growth driver for the German economy," he cautioned.
"Today's numbers provide further evidence that the labour market is gradually losing steam, indicating the cushioning impact on the economy should peter out in the coming months.
"However, the lack of qualified employees and still strong labour demand in domestic sectors should make the current slowdown a very gentle one," the expert said.
Christian Ott at Natixis said that with the German economy slated to contract slightly in the fourth quarter, "a turnaround of the labour market is not expected before mid-2013."
Newedge Strategy analyst Annalisa Piazza said companies were staying cautious in their hiring plans as the crisis causes profits to shrink and "looking ahead, we expect the German labour market to continue to deteriorate."
UniCredit analyst Alexander Koch was less pessimistic, however.
"The current stronger-than-expected rise in official unemployment is still no confirmation that the German labor market eventually entered a downswing," he said, arguing that much of the deterioration was likely due to the phasing out of labour market relief measures.
"The resilient labour market is continuing to support private spending," as seen in the recent rise in the key GfK consumer confidence index, Koch said.
Last week, the GfK index rose to the highest level for five years on the back of rising income expectations.