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German Unemployment Unexpectedly Climbs in Coldest December for 40 Years

German unemployment unexpectedly rose in December for the first time since June 2009 as the coldest weather in more than 40 years led companies to shed staff.

The number of people out of work rose a seasonally adjusted 3,000 to 3.15 million, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decrease of 15,000, according to the median of 21 estimates in a Bloomberg News survey. The adjusted jobless rate was unchanged at 7.5 percent.

Germany suffered its coldest December since 1969, the DWD weather service said, disrupting freight and air-passenger travel at transport hubs such as Frankfurt Airport. Still, with business confidence at a record that month as the recovery in Europe’s biggest economy spreads from exports to domestic spending, the jobless setback may be temporary.

“Last month was bitterly cold and it would be no surprise if some transport and construction companies laid off staff,” Holger Bahr, chief macro-economist at DekaBank in Frankfurt, said in an interview. “The positive underlying trend for unemployment remains intact.”

The euro was up 0.2 percent at $1.3401 as of 11:37 a.m. in Berlin.

The German economy probably expanded 3.7 percent in 2010, the fastest pace since records for a reunited Germany began in 1992, the European Commission and four institutes that advise the government forecast. It will grow as much as 2.5 percent this year, according to the institutes and the commission, the European Union’s executive body.

‘Weather-Related Blip’

Growth prospects for Germany “remain very positive” and are probably underestimated by most forecasters, Ken Wattret, chief euro-area economist at BNP Paribas SA in London, said in a note. Unemployment is at the lowest level for almost two decades, “pointing to an increased contribution to growth from consumer spending from 2011,” he said. The rise in unemployment last month “looks like a cold weather-related blip.”

Volkswagen AG’s Audi unit aims to add 1,200 new positions in 2011 and invest 11.6 billion euros ($15.6 billion) by 2015 in what it described in a Dec. 27 statement as the biggest investment program in the company’s history.

Deutsche Lufthansa AG, Europe’s second-largest airline after Air France-KLM Group, said yesterday that it aims to hire about 4,000 employees in Germany this year.

All except two of 46 trade and industry associations polled last month by the IW Institute in Cologne said their members expect to increase or maintain investment levels through 2011. Twenty-three of the groups said they see companies in their sector boosting employment.

Plowing In Cash

“Companies are plowing cash into investments to meet exports and -- increasingly -- consumer demand, which are signs that economic growth has broadened,” Rolf Kroker, an economist at the IW Institute, said in an interview.

Jobs are even rolling in to Berlin, which struggled to overcome the loss of subsidies after reunification of East and West Germany in 1990 and is still not home to one of the 30 companies listed on the benchmark DAX index.

Pfizer Inc.’s Wyeth unit plans to open a branch in the German capital this year, creating 200 jobs, the city administration said Dec. 12. Mercedes Benz Bank may add 700 positions in the capital, the company said on Nov. 19.

With the German economy showing few signs of cooling, companies are increasingly in competition for skilled staff. Pay increases for workers in Bavaria’s electrical and metalworking sectors are being brought forward to this month from April 1, the Bayme and VBM employers groups said yesterday.

‘Small Dent’

“Demand for workers is strong,” Frank-Juergen Weise, chairman of the Federal Labor Agency, said today. He said the “early and severe onset of winter” caused more layoffs in the construction industry than in 2009, forecasting further rises in January and February before joblessness recedes again in March.

December’s increase “may put a small dent in hopes that the German recovery will spread to the consumer sector in 2011,” said Ben May, an economist at Capital Economics Ltd. in London. “Past experience suggests that it will be a very long time before wage growth begins to pick up from its current low rate, implying that it is still too soon to bank on a strong and sustained consumer revival.”

According to OECD data, Germany’s jobless rate remained unchanged at 6.7 percent in October compared with 9.8 percent in the U.S. The equivalent rate in Spain was 20.7 percent and 9.8 percent in France, while the average rate for the then 16 states of the euro region was 10.1 percent. Estonia joined the euro on Jan. 1, bringing the number of states using the euro to 17.

To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net; Christian Vits in Nuremberg, Germany via cvits@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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