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German unemployment increased in March

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German unemployment increased in March
File photo of unemployed workers in Germany. Photo: DPA
13:15 CEST+02:00
German unemployment edged up to 8.6 percent of the workforce in March from 8.5 percent one month earlier, raw figures released on Tuesday by the national labour office showed.

The unadjusted figure serves as a reference for public discussion in Germany, the biggest European economy.

Meanwhile, the number of unemployed people posted a sharp increase of 69,000, other data corrected for seasonal variations showed. A total of 3.586 million people were looking for work in March, the labour office said.

Economists polled by Dow Jones Newswires had expected unemployment to fall in March, when rising temperatures support outdoors activities that help the labour market as a whole.

"The economic contraction is having an increasing effect on the labour market," labour agency president Frank Weise said in a statement. He pointed to the rising unemployment rate, a drop in the creation of jobs that paid into unemployment insurance funds, and a fall in the number of vacant posts.

Widespread use of part-time contracts subsidised by the government likely prevented a stronger increase. The rise was nonetheless "a clear sign that the downturn is spreading from the external and industrial sectors to the wider economy," Capital Economics analyst Jennifer McKeown said.

"The 69,000 increase in the number of unemployed was the sharpest so far in this cycle," she added. Surveys of hiring intentions have suggested that the labour market downturn will increase, which McKeown said would offset a boost to disposable incomes from falling inflation. Consumer spending would therefore likely remain very weak, which "supports our view that a recovery is some way off," the economist said.

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