German Unemployment Declines for 12th Straight Month as Economy Recovers
Chancellor Angela Merkel’s Cabinet in April extended the job incentives program until 2012, having earlier extended it to the end of this year. Photographer: Jock Fistick/Bloomberg
German unemployment fell for a 12th month in June as business confidence improved, putting the nation’s export-led economic recovery on a broader footing.
The number of people out of work declined a seasonally adjusted 21,000 to 3.23 million, the lowest since December 2008, the Federal Labor Agency in Nuremberg said today. Unemployment was forecast to fall 30,000, according to the median of 29 estimates in a Bloomberg survey. The adjusted jobless rate remained at 7.7 percent.
The German economy, Europe’s biggest, is showing signs of evading the worst of the euro region’s sovereign debt crisis, which has forced governments across the 16-nation bloc to step up spending cuts. Consumer confidence will hold steady next month, market research company GfK SE said June 23, a day after the Ifo institute said its business climate index unexpectedly rose to the highest in two years.
“The German labor market performance remains impressive and clearly is the showcase of German crisis management,” Carsten Brzeski, an economist at ING Group in Brussels, said in a note to investors. “The recent performance is remarkable as it coincides with a gradual decline in short-term work schemes, underlining the strength of the labor market.”
On an unadjusted basis, unemployment fell 88,200 to 3.15 million, according to the agency. It said the labor market improved on the back of the economic recovery.
Euro
The euro remained higher against the dollar after the report and was up 0.6 percent to $1.2262 as of 11:51 a.m. in Berlin. It has fallen 14 percent this year as the region’s debt crisis undermined confidence in the currency.
The decline is benefiting the German economy by boosting export competitiveness outside the euro region. Industrial production increased more than economists forecast in April and factory orders unexpectedly jumped for a second month.
The Essen-based RWI institute on June 23 raised its 2010 growth projection to 1.9 percent from 1.4 percent, saying government austerity measures won’t hurt the recovery. Ifo raised its forecast the same day to 2.1 percent from 1.7 percent.
Even so, the outlook for the German labor market is still “surrounded by uncertainty,” Labor Agency head Frank-Juergen Weise told reporters in Nuremberg today. While the current economic recovery won’t fully offset the negative effects from the financial crisis, there’s still “a chance” that less than 3 million people will be unemployed by the end of the year, Weise said.
Hiring Rise
German companies plan to take on more workers in the second half of the year as economic growth picks up, Ifo said in a survey of executives for WirtschaftsWoche magazine published June 26. Unemployment will fall to 2.9 million by November and 2.8 million a year later, a 20-year low, Allianz SE Chief Economist Michael Heise said.
Daimler AG has hired 1,800 temporary workers and added Saturday shifts at German assembly plants making the Mercedes- Benz SLS gull-wing sports car, GLK sport-utility vehicle and E- Class convertible. Bayerische Motoren Werke AG has hired 5,000 temporary workers.
Siemens AG, Europe’s largest engineering company, yesterday predicted “continued strong profitability” in its third quarter as demand rebounds for factory automation gear, health- care products and light bulbs. New orders and sales in the quarter will exceed year-earlier figures, it said.
While Germany’s economy shrank 4.9 percent last year, the most since World War II, the government limited the increase in unemployment with incentives for companies to retain workers. Chancellor Angela Merkel’s Cabinet in April extended the job incentives program until 2012, having earlier extended it to the end of this year.
According to Organization for Economic Cooperation and Development data, Germany’s jobless rate was 7.1 percent in April. The equivalent rate in France was 10.1 percent and the U.S. rate was 9.9 percent.
To contact the reporters on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net; Christian Vits in Frankfurt at cvits@bloomberg.net
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