German Unemployment Rose for an Eighth Month in November
The number of people without a job increased a seasonally adjusted 5,000 to 2.94 million, the Federal Labor Agency in Nuremberg said today. Economists forecast a gain of 16,000, the median of 37 estimates in a Bloomberg News survey shows. The adjusted jobless rate held at 6.9 percent. Separately, a gauge of economic confidence in the euro area unexpectedly rose.
With the 17-nation currency bloc in recession and growth slowing in emerging markets, German firms are postponing investment and hiring decisions. The unemployment rate rose for the first time in three years in September. While Europe’s largest economy expanded 0.2 percent in the third quarter, latest reports suggest growth may grind to a halt in the fourth as export demand wanes.
“It is doubtful whether private consumption can really take over the baton as the main growth driver for the German economy,” said Carsten Brzeski, an economist at ING Group in Brussels. “German unemployment looks set to increase further. This increase, however, should only be very mild, mainly located in the export industry.”
The euro advanced to $1.2983 at 11:15 a.m. in Frankfurt for a 0.2 percent gain today. European stocks rose to their highest level in three weeks amid optimism that U.S. President Barack Obama will reach an agreement with Congress over a new budget. The Stoxx Europe 600 Index (SXXP) climbed 0.8 percent to 275.39.
An index of executive and consumer sentiment in the euro area increased to 85.7 from a revised 84.3 in October, the European Commission in Brussels said today. Economists had forecast no change from an initial October reading of 84.5.
Still, the euro-area economy posted two successive quarters of negative growth through September and economists foresee a further contraction in the fourth quarter. Unemployment for the region as a whole is at a record high of 11.6 percent.
By contrast, Germany’s jobless rate is still close to a two-decade low, helping to fuel household spending and temper the economic slowdown.
“The rise in unemployment in Germany is extremely moderate and provides a good foundation for the economy as such,” said Jens Kramer, an economist at NordLB in Hanover. “If people are working and earning money, they have money to spend, and that will offset some of the problems in investment.”
German investment in plant and machinery declined 2 percent in the third quarter from the second, while companies depleting inventories also dragged on growth. Economic expansion was driven by exports, construction and household and public spending.
While exports slumped 2.5 percent in September and the manufacturing and service industries are contracting, business confidence unexpectedly rose for the first time in eight months in November, signaling growth may rebound next year.
The U.S. economy probably grew at an annual pace of 2.8 percent in the third quarter, more than an initial reading of 2 percent, according to the median estimate in a Bloomberg survey before a government release today. Initial jobless claims probably fell to 390,000 in the week ended Nov. 24, a separate survey showed.
Switzerland’s economy returned to growth in the third quarter, expanding 0.6 percent, the State Secretariat for Economic Affairs in Bern said today.
The German economy will expand 0.8 percent this year and next, the European Commission forecasts. It predicts a 0.4 percent contraction in the euro area this year and growth of just 0.1 percent in 2013.
Schaeffler AG, the German roller-bearing maker that’s the biggest investor in car-parts manufacturer Continental AG, this month lowered its 2012 sales forecast because of weaker demand in Europe and Asia.
Hornbach Holding AG, a home-improvement retailer, cut its annual sales and earnings forecasts on Nov. 27, citing weakening consumer confidence across Europe.
Market research company GfK SE said this week that its German consumer-sentiment index will drop for the first time in seven months in December as Europe’s debt crisis damps households’ income expectations and willingness to spend.
“We have seen a change of trend in the labor market in the last couple of months,” said Heinrich Bayer, an economist at Deutsche Postbank AG in Bonn. “With growth rates slowing over the whole year and negative growth expected for the final quarter, the labor market won’t be gaining momentum in the near future.”
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