German payrolls growth will continue this year and unemployment will decline even as economic growth cools, according to Unicredit Group.
“Although the pace of job creation will soften in coming months, strong momentum is still in the pipeline,” said Andreas Rees, chief German economist at Unicredit in Munich. “As a result, purchasing power of private households will rise further and bolster consumer expenditures.”
Data next week may show German unemployment fell by 5,000 people in January, according to a Bloomberg News survey, extending a trend that has seen the number of jobless drop to a two-decade low. The International Monetary Fund cut its 2012 growth forecast for Germany to 0.3 percent. Still, that compares with a 0.5 percent contraction projected for the euro area.
Rees also said labor demand may create bottlenecks in the next few years as the supply of workers dwindles. Labor Minister Ursula von der Leyen said on Jan. 25 that companies may struggle to find workers amid a shrinking population.
“Paradoxically, the German labor market’s whopping success story seems to entail some risks going forward,” Rees said. “Highly qualified personnel becoming increasingly scarce may cause companies to move their businesses abroad or lose market shares instead.”
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