German Unemployment Increased Four Times Forecast in MayStefan Riecher
German unemployment rose more than four times as much as economists estimated in May as the euro area’s sovereign debt crisis and a long winter took their toll on Europe’s largest economy.
The number of people out of work climbed a seasonally adjusted 21,000 to 2.96 million, the Nuremberg-based Federal Labor Agency said today. That’s the fourth straight monthly gain. Economists predicted an increase of 5,000, according to the median of 35 estimates in a Bloomberg News survey. The adjusted jobless rate held at 6.9 percent, just above a two-decade low of 6.8 percent.
German gross domestic product grew just 0.1 percent in the first quarter after a 0.7 percent slump in the previous three months as the 17-nation euro area, the country’s biggest export market, remained mired in recession. Still, business confidence rose this month for the first time since February and consumer confidence is set to climb to the highest since 2007 in June, according to market researcher GfK AG.
“This is a clear warning that the debt crisis is finally taking its toll on the German labor market,” said Carsten Brzeski, senior economist at ING Groep NV in Brussels. However, weak data “can also be explained by the relatively high number of public holidays in May and the still cold weather. Therefore, it is far too premature to start singing Swan Songs on the labor market.”
The euro was little changed after the report and traded at $1.2887 at 10:23 a.m. in Frankfurt.
Construction output fell 2.1 percent in the first quarter from the previous three months and exports declined 1.8 percent, the Federal Statistics Office said last week.
Puma SE, Europe’s second-largest maker of sporting goods, cut its revenue and profit forecasts for this year on May 14, citing a “challenging” business environment in Europe and disappointing sales in China.
Lanxess AG, the chemical maker that joined the benchmark DAX index in September, on May 8 predicted lower-than-estimated operating profit in the second quarter on weaker orders from the tire and auto industries.
The European Central Bank this month cut its benchmark interest rate to a record low of 0.5 percent and President Mario Draghi said the central bank stands ready to act again if necessary. The currency bloc’s economy shrank 0.2 percent in the first three months of the year, a sixth straight quarterly contraction.
Still, household spending in Germany rose 0.8 percent in the first quarter and the Bundesbank expects the economy to gather pace in the current quarter.
“May wasn’t a very good month for the German labor market,” Frank-Juergen Weise, president of the Federal Labor Agency, said at a press conference in Nuremberg today. “However, in general, the labor market is in good shape.”
Germany is “in the trap of success” because “we already have very high employment and a stable labor market and, as a consequence, it is difficult to expect further improvement from such high levels,” he said.
HeidelbergCement AG, the world’s third-largest maker of cement, said on May 8 that first-quarter earnings rose 3.3 percent as North American growth and job cuts helped offset the effects of harsh winter conditions in its domestic markets.
Beiersdorf AG, the German maker of Nivea skin cream, on May 2 reported first-quarter profit that exceeded analysts’ estimates as higher emerging-market sales countered a drop in Europe.
“Germany’s economy is solid, and sooner or later the unemployment numbers will go down again,” said Alexander Koch, an economist at UniCredit Group in Munich. “I’m quite optimistic for the months to come.”