German Unemployment Unchanged as Migrants Bolster Workforceby
March snaps run of five monthly declines in number out of work
Jobless rate remains at record-low level of 6.2 percent
German joblessness was unchanged in March, snapping a run of five consecutive declines, in a sign that Europe’s largest economy may be struggling to absorb a wave of refugees.
The number of people out of work held at a seasonally adjusted 2.73 million, data from the Federal Labor Agency in Nuremberg showed on Thursday. Economists surveyed by Bloomberg predicted a decline of 6,000. The jobless rate stayed at a record-low 6.2 percent.
Germany admitted more than 1 million migrants in 2015 alone, increasing the pool of potential workers. While companies have been hiring, they’re simultaneously having to deal with a China-led slowdown in emerging markets that’s curbing exports and posing a risk to the euro area’s fragile recovery.
“For this year in general, we expect a rise in the unemployment figure due to the large inflow of refugees we have seen over the last year,” said Johannes Gareis, an economist at Natixis in Frankfurt. The refugees “can’t be integrated easily into the German labor market.”
A report by the labor agency’s research arm published on Thursday suggested that it will take time for most refugees to overcome legal and institutional hurdles, language deficiencies and a lack of qualifications.
“Migration will become only slowly noticeable in the labor market,” according to the report. “In the coming years, it can be expected that the labor supply will expand because of migration and the number of unemployed refugees will rise.”
Separate data have shown that companies are optimistic about their outlook. The Ifo institute’s business climate index rose for the first time in four months in March. German retail sales jumped 5.4 percent in February from a year earlier, data showed on Thursday.
The strength of the country’s labor market could also be key for wage negotiations, with an impact on inflation. Consumer prices rose 0.1 percent in the year through March, up from a decline of minus 0.2 percent the prior month, according to figures on Wednesday.
With Germany’s economy critical for the euro area’s continued recovery, those figures are important for European Central Bank President Mario Draghi and his colleagues. Monetary-policy makers ramped up their stimulus package for the 19-nation currency bloc in March, in their latest effort to return regional inflation to their goal of just under 2 percent. The rate was minus 0.1 percent in March, initial data showed on Thursday.