German unemployment plunged in February three times as fast as economists forecast, underlining the gulf between Europe’s biggest economy and the region’s peripheral countries.
The number of people out of work fell a seasonally adjusted 52,000 to 3.07 million, the lowest since September 1992, the Nuremberg-based Federal Labor Agency said today. Economists forecast a drop of 18,000, according to the median of 30 estimates in a Bloomberg News survey.
“The labour market recovery, which started around the middle of 2009, is continuing at an unabated pace as the German economy is powering ahead,” said Aline Schuiling, an economist at ABN Amro Bank NV in Amsterdam. Germany “remains the star performer of the eurozone.”
Germany’s shrinking joblessness is helping Chancellor Angela Merkel’s government meet a constitutionally imposed deficit ceiling in 2015, a year earlier than planned. Merkel plans to tout Germany’s belt-tightening at two European Union summits this month that aim to staunch the financial crisis that has forced Ireland and Greece to seek bailouts.
All European countries must take budget cutting “just as seriously as we do in Germany,” bolstering competitiveness to “maintain the confidence of financial markets” in the euro, Finance Minister Wolfgang Schaeuble said yesterday in a speech.
The euro climbed 0.19 percent after the jobless report to $1.3832 at 10:10 a.m. Frankfurt time, bringing the gain in the single currency to 3.3 percent so far this year.
As governments in countries such as Portugal, Ireland, Greece and Spain cut spending to rein in budget deficits, German exports to Asia and stronger household spending are helping buoy the economic outlook. Business confidence rose in February to the highest since records for a reunified Germany began in 1991. Consumer confidence will increase to the highest level in three and a half years in March as growth fuels income expectations, Nuremberg-based market research company GfK said on Feb. 22.
Stuttgart-based Daimler AG said on Feb. 24 it will add 10,000 jobs, while Volkswagen AG, Europe’s biggest carmaker, plans to add 6,000. Robert Bosch GmbH, the world’s biggest automotive supplier, said Jan. 24 that it plans to add 16,500 jobs this year to satisfy a “boom in emerging markets.”
“Economic growth has broadened, sparking company spending in investment goods as well as solid growth in private consumption,” Rainer Sartoris, an economist at HSBC Trinkaus & Burkhardt in Dusseldorf, said in an interview.
Early Winter Onslaught
German joblessness has now declined for each of the last 19 months with the exception of December, when it rose by 1,000 amid the coldest winter in more than 40 years. The early onslaught of winter led to a rise in unemployment sooner than would normally be expected, helping the numbers in February, the Labor Agency said. An ageing workforce also lowered the number of those seeking work.
The adjusted jobless rate fell to 7.3 percent, the lowest since December 1991, down from a post-World War II high of 12.1 percent in March 2005.
Ireland’s unemployment more than tripled over the same period, to 13.4 percent in January from 4.1 percent in 2005, according to Eurostat data. The jobless rate in Spain was 20.3 percent in December, up from 8 percent in 2007; in Greece, it was 13.9 percent in November after 6.6 percent in 2008. Italy’s jobless rate held at 8.6 percent in January for a third month, close to a seven-year high.
In Germany, “a further drop in unemployment to below 7 percent in the course of this year looks very likely,” said Carsten Brzeski, an economist at ING Groep NV in Brussels. “Even if the German economy is still a far cry from full employment, the good-news show will continue.”
Using the latest data from the Paris-based Organization for Economic Cooperation and Development, Germany’s unemployment rate of 6.6 percent in December compared with an average in the-then 16-state euro region of 10 percent and 9.6 percent in the 27-nation EU. In France, Germany’s main EU trading partner, the rate was 9.7 percent, in the U.S. 9.4 percent, while the Group of Seven average was 8 percent.
Companies in Germany plan to hire as many as 300,000 workers this year, according to a survey of 28,000 firms by the DIHK industry and trade chambers group this month. Machine and electrical companies may add 80,000 jobs, the DIHK said.
Expansion by companies in Germany’s southern regions may already be crimped by a shortage of skilled labor. A January IHK industry and trade chamber poll of 3,800 companies in Bavaria showed that some 41 percent of local companies were failing to recruit skilled staff.
In January, the Labor Agency announced a 10-point plan through to 2025 to reduce shortages of skilled labor as regional offices reported 374,000 vacancies in technology as well as health and service sectors such as hotels and catering.