German Unemployment Unexpectedly Gains in Summer LullJana Randow
German unemployment unexpectedly rose in August for the first time in three months and inflation slowed in a sign that Europe’s biggest economy is cooling after a second-quarter surge.
The number of people out of work climbed by a seasonally adjusted 7,000 to 2.95 million, the Nuremberg-based Federal Labor Agency said today. Economists predicted a decline by 5,000 in a Bloomberg News survey. The adjusted jobless rate stayed at 6.8 percent, near a two-decade low. Consumer prices, calculated using a harmonized European Union method, rose 1.6 percent from a year earlier, compared with 1.9 percent in July, the Federal Statistics Office said in Wiesbaden.
Some companies are still cutting jobs as countries in the euro region’s periphery struggle to emerge from recession. The labor market is a point of contention among German politicians as they campaign ahead of Sept. 22 elections, with Chancellor Angela Merkel opposing challenger Peer Steinbrueck’s pledge to raise taxes.
“We would not read too much into the August uptick in the number of unemployed, which could be due to seasonal effects,” said Thomas Harjes, senior European economist at Barclays Plc in Frankfurt. “The robust job creation and decline in the unemployment rate since 2009 should be a key factor of support for the current federal government.”
The euro was down 0.8 percent at $1.3238 at 3:53 p.m. in Frankfurt. The benchmark DAX stock index was little changed at 8,156.52. The yield on German 10-year bunds fell to 1.86 percent.
Germany’s gross domestic product expanded 0.7 percent in the three months through June, after stagnating in the first quarter as a colder-than-usual winter curbed output. Growth will “normalize and stabilize” in the remainder of 2013, the Bundesbank said on Aug. 19. The Frankfurt-based central bank forecast in June that the German economy will grow 0.3 percent this year and predicted average inflation of 1.6 percent.
While the 17-nation euro region, Germany’s largest trading partner, emerged from six quarters of contraction in the second quarter with growth of 0.3 percent, Spain and Italy remained in recessions. Unemployment in the currency bloc probably remained at a record 12.1 percent in July, according to the median estimate in a Bloomberg survey before Eurostat releases the data at 11 a.m. tomorrow.
ThyssenKrupp AG, Germany’s biggest steelmaker, plans to cut 3,000 administrative jobs over three years and said this month it’ll shut two plants at Neuwied. Salzgitter AG, the rival steelmaker that predicts a loss for 2013 amid waning demand in Europe, will eliminate more than 1,500 positions.
At the same time, General Motors Co.’s Opel division is seeking about 300 new engineers for its international technical development center in Ruesselsheim, close to Frankfurt. Hamburger Hafen & Logistik AG, the handler of about 80 percent of containers at Hamburg’s port, will create about 100 jobs from September, board member Heinz Brandt told Hamburger Abendblatt in an interview published on Aug. 15.
“Unemployment rose during the summer break in August,” Frank-Juergen Weise, head of the German labor agency, said in a statement today. “Overall, the German job market is stable.”
Merkel, whose Christian Democrats lead Steinbrueck’s Social Democrats by 15 percentage points in the latest Emnid poll, has turned her campaign focus to the economy four weeks before parliamentary elections. During a rally in the eastern town of Wernigerode last week, she warned that plans by the SPD to raise taxes would upend Germany’s robust labor market.
“It’s the wrong thing to do during a time now where there are more jobs and our economy is largely in balance,” she said.
Steinbrueck said today in Berlin that his priorities for the first 100 days in office if he wins include a minimum wage of 8.50 euros ($11.28) an hour, equal pay for men and women, same pay for the same job for temporary agency workers and permanent staff, and tax increases for higher earners.
European Union Economic and Monetary Affairs Commissioner Olli Rehn said today that Germany and France hold the key to rebalancing the European economy and must follow through on promised reforms.
“In a nutshell, this calls for competitiveness-supporting economic reforms to the labor market, business environment conditions and the pension system in France, and for structural measures to further reinforce domestic demand in Germany,” Rehn said in prepared remarks for a speech in Alpbach, Austria.
In the U.S., data showed the economy expanded at a faster pace in the second quarter as a smaller trade deficit and gains in inventories overshadowed the effects of federal budget cutbacks. GDP rose at a 2.5 percent annualized rate, up from an initial estimate of 1.7 percent, the Commerce Department said in Washington. The median forecast of 79 economists surveyed by Bloomberg projected a 2.2 percent gain.
Australian business investment rose last quarter as stronger mining spending outweighed a decline in manufacturing. Capital spending gained 4 percent from the first quarter, when it fell a revised 4.1 percent, the Bureau of Statistics said in Sydney. That compares with the median forecast for no change in a Bloomberg News survey of 20 economists.
Reserve Bank of Australia Governor Glenn Stevens and his board slashed borrowing costs by 2.25 percentage points over the past 22 months to 2.5 percent to foster a transition to industries including residential construction as resource investment wanes. Prime Minister Kevin Rudd, who has called the end of Australia’s China-led mining boom, has set an election for Sept. 7 framed around economic management.