German unemployment increased for a fifth straight month in August as the European debt crisis curbed demand for exports and companies held back investment.
The number of people without a job increased a seasonally adjusted 9,000 to 2.90 million, the Federal Labor Agency in Nuremberg said today. Economists forecast a gain of 7,000, the median of 31 estimates in a Bloomberg News survey shows. The adjusted jobless rate was unchanged at 6.8 percent.
Companies are delaying hiring and investment as the debt crisis curbs European demand for their goods and damps the outlook for economic growth and corporate earnings. The jobless rate is still at a two-decade low and wages are rising, boosting consumer spending in Europe’s largest economy and helping it to weather the turmoil. Until April, unemployment had sustained an almost uninterrupted decline for more than two and a half years.
“The strong labor market has been one of the main drivers of German growth in the first half of the year,” said Carsten Brzeski, senior economist at ING Group in Brussels. “Today’s numbers provide further evidence that the labor market is gradually losing steam and that the positive impact on the economy should peter out toward the end of the year.”
The euro was little changed after the report and traded at $1.2553 at 11:50 a.m. in Frankfurt, up 0.2 percent on the day.
Unemployment rose an unadjusted 29,000 in August, today’s data showed. The weaker economy is hurting the labor market, the labor agency said in a press release.
“It’s normal for unemployment to rise in a holiday month, but the increase this month is bigger than usual,” labor agency President Frank-Juergen Weise told a press conference.
German economic growth slowed to 0.3 percent in the second quarter from 0.5 percent in the first. That’s still better than the 0.2 percent drop in euro-area gross domestic product in the three months through June.
With the European Commission forecasting a 0.3 percent contraction of the 17-nation economy this year, German companies are reluctant to expand production capacity.
German capital investment fell 0.9 percent in the second quarter from the first, with spending on plant and machinery down 2.3 percent and construction spending falling 0.3 percent, a breakdown of GDP showed on Aug. 23. By contrast, private consumption rose 0.4 percent in the quarter.
The Bundesbank raised its 2012 growth forecast for Germany to 1 percent from 0.6 percent in June, citing domestic consumption.
“Private spending alone can’t stop Germany’s export-oriented economy from cooling,” said Christian Lips, an economist at NordLB in Hanover. “With all the unresolved problems in the euro area, companies are uneasy and are postponing investments, and this has an effect on employment.”
Siemens AG said on Aug. 27 it will cut 500 jobs at its German factories making industrial gear boxes and clutches by 2016, citing slack demand.
Almost 1,800 jobs are at risk in Chancellor Angela Merkel’s electoral district after the shipbuilder P+S Werften GmbH filed for insolvency. ThyssenKrupp Steel Europe AG, Germany’s biggest steelmaker, introduced shortened shifts for workers this month due to “ongoing weak orders.”
German factory orders fell 7.8 percent in June from a year earlier and business confidence fell for a fourth straight month in August. Manufacturing contracted this month.
Germany’s jobless rate was 5.4 percent in June, according to the latest harmonized Organization for Economic Cooperation and Development figures. That compared with 8.2 percent in the U.S., 10.8 percent in Italy and a euro-area average of 11.2 percent.