German labour market starts year in good shape
Unemployment in Germany remains in surprisingly good shape at the start of 2014 as the outlook for Europe's top economy continues to improve, official data showed on Thursday.
On the face of it, the German jobless total increased by 263,000 to 3.136 million and the jobless rate -- which measures the proportion of people out of work against the working population as a whole -- jumped to 7.3 percent in January from 6.7 percent in December, the Federal Labour Office calculated.
But unemployment tends to rise in the winter months as sectors such as the construction industry lay off workers due to the bad weather.
Adjusted for such factors, the number of people registered as unemployed in Germany fell by 28,000 to 2.927 million in seasonally adjusted terms this month, the Federal Labour Office said in a statement.
Analysts had been projecting a much smaller decline of just 5,000.
The seasonally-adjusted unemployment rate was unchanged at 6.8 percent, the Federal Labour Office said.
"The labour market is continuing to develop positively," the office said.
Labour Minister Andrea Nahles agreed.
"Today's data show that the labour market is in good shape and the employment situation in Germany is stable," she said.
"The German economy is humming along, with more good news today for consumers in the shape of the largest fall in unemployment for two-and-a-half years," said Berenberg Bank economist Rob Wood.
"The strong labour market reflects the economic recovery following the European Central Bank's actions in summer 2012, and raises the chances of stronger wage growth and higher consumption this year.
"We expect the economy to grow 2.2 percent this year," the expert added.
Natixis economist Johannes Gareis also said the drop in the seasonally adjusted total this month was a positive surprise, even if the mild winter weather in January contributed to this.
"All in all, the German labour market is in a solid position. The jobless rate is close to its lowest level since reunification. Thus, Germany's labour market remains the backbone of the domestic economy, especially of private consumption," Gareis said.
BayernLB economist Stefan Kipar noted that the December figures had also been revised downwards.
"But the decline was not solely attributable to the mild weather," Kipar said.
"In fact, the labour market appears to be picking up at the turn of the year," Kipar said.
"The situation on the labour market is currently more favourable than it has been since unification. In view of the positive trend in key sentiment indicators and rising capacity utilisation in industry, the rise in employment should accelerate in the coming months and unemployment come down a bit further," Kipar concluded.
IHS Global Insight economist Timo Klein said that "overall, labour market conditions remain healthier in Germany than in most other countries in Europe, and the boosting effect that the eurozone debt crisis has had on German unemployment during 2012-13 has been a very mild one and is now waning."
Key leading indicators such as the Ifo business climate have been rebounding fairly markedly already since November 2012.
Helped by a state-run job creation schemes and mild winter weather, unemployment "has now reverted to a modest downward trend, which will give consumer demand further impetus during 2014," Klein said.
"Overall, German economic growth is gaining momentum at present," he said.
© 2014 AFP