German unemployment fell for the first time in three months in a sign that Europe’s largest economy is gathering pace after a second-quarter slowdown.
The number of people out of work dropped a seasonally adjusted 12,000 to 2.9 million in July, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decline of 5,000, according to the median of 31 estimates in a Bloomberg News survey. The adjusted jobless rate was unchanged at 6.7 percent, the lowest level in more than two decades.
Germany has led the euro area’s recovery and a survey by GfK SE shows that consumer confidence in August will be the strongest since 2006. The Bundesbank predicts that while the nation’s economic growth may have stagnated in the three months through June, it will pick up again this quarter.
“There’s no need to be concerned about the German economy or its labor market,” said Andreas Moeller, an economist at WGZ Bank in Dusseldorf. “Germany is still outperforming most of Europe and it’s competitive even if wages were to increase a bit.”
Bundesbank President Jens Weidmann said this week that signs of labor shortages are increasing and that there’s “practically full employment” in a range of industries. Wages nationally could rise by around 3 percent, he told Frankfurter Allgemeine Zeitung.
The tight labor market may limit the scope for employment gains. Osram AG, the world’s second-biggest lighting company, said this week it will cut an additional 1,700 jobs in Germany and 6,100 elsewhere to safeguard earnings. Porsche AG, the sports-car maker which is part of Volkswagen AG, says its hiring of about 1,000 employees annually over the next five years will be mostly outside its home country.
The number of people out of work fell by 5,000 in western Germany and 7,000 in the east, today’s report showed.
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.
The jobless rate in the 18-nation currency bloc probably held at 11.6 percent in June and inflation remained at 0.5 percent in July, according to separate Bloomberg surveys before figures from the European Union’s statistics office today. The reports are scheduled to be published at 11 a.m. in Luxembourg.
European Central Bank President Mario Draghi last month unveiled a range of measures including targeted long-term loans for banks and a negative deposit rate to fight low inflation and boost growth in the region. He said in April that his “biggest fear” is a stagnation that leads to high unemployment becoming structural.