German unemployment unexpectedly increased for a second month amid signs of a slowdown in Europe’s largest economy.
The number of people out of work rose a seasonally adjusted 9,000 to 2.916 million in June, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decline of 10,000, according to the median of 24 estimates in a Bloomberg News survey. The adjusted jobless rate was unchanged at 6.7 percent, the lowest level in more than two decades.
While Germany has led the euro area’s economic recovery this year, business confidence declined in June to the weakest level this year and ZEW investor sentiment unexpectedly dropped for a sixth month. The Bundesbank said last month that economic growth probably slowed in the second quarter after unusually warm weather boosted output in the first three months.
“There may be a bit of a slowdown but Germany’s economy is still growing and very solid,” said Ulrike Kastens, senior economist at Sal. Oppenheim Group in Cologne. “Unemployment is low and while there could be a slight increase of the number of people out of work in the coming months we don’t expect a significant deterioration of the labor market in general.”
Dusseldorf-based EON SE, the country’s biggest utility, is considering cutting at least 500 jobs when it merges its conventional and renewables generation units. Bayer MaterialScience AG, a unit of Bayer AG, said yesterday that 90 staff will be affected by the closure of its site in Darmstadt, Germany.
The German economy expanded 0.8 percent in the first three months of 2014. That’s twice as fast as the previous quarter and four times as fast as the euro area as a whole.
“For the coming months we expect a steady development of the job market,” Frank-Juergen Weise, president of the Federal Labor Agency, said at a press conference in Nuremberg. “The good economic outlook is reflected in a fundamentally positive trend.”
Manufacturing in the euro area slowed more than initially estimated in June, London-based Markit Economics said today. It grew at the fastest pace since 2007 in Spain, while contracting for a second month in France.
The euro was little changed after the releases and traded at 1.3685 at 11:04 a.m. in Frankfurt.
The jobless rate in the currency bloc held at 11.6 percent in May after the April number was revised down from 11.7 percent, the European Union’s statistics office in Luxembourg said today in a separate report.
European Central Bank President Mario Draghi said in April that his “biggest fear” is a euro-area stagnation that leads to high unemployment becoming structural. In June, he unveiled a package of stimulus measures including a negative deposit rate and conditional long-term loans to banks to boost the region’s floundering economic revival.
Economists surveyed by Bloomberg News expect the ECB to leave its benchmark rate unchanged at a record low of 0.15 percent and the deposit rate at minus 0.1 percent when policy makers meet in Frankfurt on July 3.