German unemployment hits 16-year low

German unemployment hits 16-year low
Photo: DPA
The number of people unemployed in Germany fell below three million for the first time for 16 years in October, data from the Federal Labour Agency showed on Thursday.

The unemployment rate fell in October to 7.2 percent from 7.4 percent in September, with 26,000 fewer people registered as seeking work in the biggest European economy. A total of 2,997,000 people were listed on unemployment rolls the agency said.

UniCredit economist Alexander Koch noted that it was the 41st decrease in the past 43 months, and took unemployment to its lowest level since November 1992. But “the lagging indicator labour market is coming more and more under pressure from the strong economic downward forces,” Koch added. “A sizeable cyclical decline in employment lies ahead in the course of the next year.”

Other economists agreed Germany’s labour market remained surprisingly robust in the face of the economic downturn, but it wasn’t likely to stay that way.

Capital Economics economist Jennifer McKeown said that with surveys of hiring intentions pointing to “a very sharp slowdown in annudal employment growth to zero from recent rates of around 1.5 percent, it won’t be long before unemployment starts to rise.”

Koch forecast that “temporary workers, who boosted the recent labour market upswing, will also lead the way in the foreseeable labour market downswing.”

Several major German groups, including chemical giant BASF, auto parts maker Continental and the industrial conglomerate MAN warned Thursday they would not attain their 2008 growth targets, as orders have fallen sharply.

German automakers in particular have plans to layoff staff as they seek to contain costs during the economic slump.

At IHS Global Insight, senior economist Timo Klein said that while the rate could fall further in November and December, “unemployment will clearly revert to an upward tendency during 2009.” He forecast a rate of “at least 8.5 percent” by the end of next year.

Jobs in Germany