German unemployment fell for a fourth month in March as companies became more confident in the health of Europe’s largest economy.
The number of people out of work decreased by a seasonally-adjusted 12,000 to 2.9 million, after falling a revised 15,000 the previous month, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decline of 10,000, according to the median of 31 estimates in a Bloomberg News survey. The adjusted jobless rate was unchanged at 6.7 percent after being revised down the prior month to the lowest level in at least two decades.
Falling unemployment in Germany is supporting domestic consumption just as a recovery in the rest of the euro area, the country’s biggest trading partner, bolsters exports. The Bundesbank says the German economy probably strengthened “substantially” in the first quarter, after an expansion of 0.4 percent in the three months through December that beat economists’ estimates.
“The underlying trend is a gradual decline in German unemployment over the course of the year,” said Holger Schmieding, chief economist at Berenberg Bank in London. “However, unemployment cannot fall much further because the people who are still unemployed do not have the skills needed to find jobs.”
The number of people unemployed fell by 2,000 in west Germany and 10,000 in the eastern part, the labor-agency report showed.
Germany’s jobless numbers highlight how it’s faring better than the rest of the 18-nation euro area. Figures from the European Union’s statistics office to be released at 11 a.m. in Luxembourg will probably show the unemployment rate in the currency bloc held at 12 percent in February, near an all-time high, according to a separate Bloomberg survey.
Hannover, Germany-based Continental AG, Europe’s second-biggest maker of car parts, said last month that it’ll hire about 7,000 people in 2014, mostly in growth markets. Bayer AG, the country’s largest pharmaceuticals company, said it’ll create 500 new jobs at its sites in Wuppertal and Leverkusen.
The tighter labor market is helping to boost employment costs. Negotiated wages will rise 3 percent this year and a national minimum wage in 2015 will increase the upward pressure, according to a report by Barclays Plc.
“The current wage negotiations for public sector employees have been tough and have already led to several warning strikes,” Thomas Harjes and Francois Cabau, economists at Barclays, said in the report. “Since public sector wage agreements often serve as a floor for the private sector, there is a risk that wage costs rise somewhat faster in 2015 than what we have currently pencilled in.”
Workers from hospitals to airlines have gone on strike to demand higher pay and benefits. Deutsche Lufthansa AG, Europe’s second-largest carrier, said this week that a stoppage by pilots would cost tens of millions of euros as it canceled thousands of flights. The company described the action as among the most severe in its history.
Economists surveyed by Bloomberg predict German economic growth of 1.8 percent this year. The European Central Bank says the euro-area economy will expand 1.2 percent.
ECB policy makers meet on April 3 in Frankfurt to set interest rates for the currency bloc. Consumer prices rose 0.5 percent in March, the slowest pace in more than four years, prompting speculation that the institution will add more stimulus. The central bank has pledged to return inflation to its goal of just under 2 percent.
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