Job market remains resilient despite crisis

The German labour market remains surprisingly resilient to the eurozone debt crisis, with unemployment in Europe's top economy falling to a four-month low adjusted for seasonal effects, data showed on Thursday.

• Some fear inflation if small euro coins cut (19 May 13)
• Economists warn against German euro exit (18 May 13)
• Germany cool to France's EU economy plan (17 May 13)

On the face of it, headline unemployment rose sharply in January, with the jobless rate jumping to 7.4 percent in raw or unadjusted terms from 6.7 percent in December, according to monthly data compiled by the Federal Labour Office.

And the unadjusted jobless total was up by more than 298,000 to 3.138 million, its highest level since March 2011.

But the increase was solely due to seasonal factors, such as the cold winter weather, and the underlying trend was positive, agency chief Frank-Jürgen Weise insisted.

"The unfavourable economic conditions haven't left much of a mark on the labour market. The latest rise in unemployment is purely due to seasonal factors," Weise said.

The seasonally-adjusted jobless rate -- which irons out seasonal fluctuations -- slipped to 6.8 percent from 6.9 percent. Unemployment in Germany has never been lower than 6.8 percent since reunification in 1990 and the rate was stable at that level for most of last year.

In concrete terms, the jobless total fell by 16,000 to 2.916 million -- its lowest level in four months -- on a seasonally-adjusted basis, much better than analysts' forecasts for an increase of as many as 10,000.

"The labour market is in fundamentally good shape and is reacting robustly to the difficult economic environment," Weise said.

Economy Minister Philipp Rösler agreed.

"All the indications are that the economic environment will continue to gradually brighten. The more positive sentiment indicators confirm this," he said.

"The German economy should have put its current dip in growth behind it by the spring and continue to pick up during the rest of the year," Rösler said.

Gross domestic product (GDP) shrank by about 0.5 percent at the end of last year, but is widely expected to start growing again in the first quarter of 2013, enabling Germany to skirt a recession, which is technically defined as two consecutive quarters of contraction.

Among a raft of recent forward-looking indicators, the ZEW, Ifo and GfK indices are all pointing upwards.

Commerzbank economist Eckart Tuchtfeld said "the labour market seems to be coping better with the cyclical setback in the second half of last year than recently assumed."

For IHS Global Insight analyst Timo Klein, it was "remarkable that despite GDP growth apparently being negative once again in late 2012, joblessness returned to a downward tendency in early 2013."

"Overall, labour market conditions continue to be much healthier in Germany than in most other countries in Europe, and the dampening effect of the eurozone debt crisis that had left its mark during 2012 appears to be petering out now," Klein said.

Natixis economist Constantin Wirschke said the excellent January data were unlikely to be repeated.

"We expect unemployment to rise slightly in the next couple of months and to stabilise thereafter. For the whole of 2013, we're predicting that the unemployment rate will hover near the historically low level currently seen in Germany," he said.

ING Belgium economist Carsten Brzeski noted that joblessness varied from sector to sector. In the export industries, for example, unemployment has started to increase as companies revise down their recruitment plans significantly.

"At the same time, companies operating in domestic sectors, such as the construction sector and health services, still have a strong demand for labour," he said.

This effect could be magnified in the coming months. But "on balance... it looks as if total unemployment should remain relatively stable throughout 2013," he said.

"Today's numbers confirm that the German job miracle has lost some of its magic. However, even without being miraculous, the labour market should remain growth-supportive," he concluded.

AFP/mry