German labour market still resilient in face of slowdown
German jobless data published on Wednesday appeared to prove the ongoing resilience of the labour market in the eurozone's biggest economy in face of a looming downturn.
But analysts warned the jobs engine in Germany may finally be running out of steam.
On the face of it, German unemployment fell again to 2.73 million or 6.5 percent of the population in October, the lowest level since unification, according to raw data published by the Federal Labour Agency in Nuremberg.
But unemployment tends to fall at this time of year as a result of seasonal factors and seasonally-adjusted data calculated separately by the Bundesbank actually showed a slight increase of 10,000 in the number of people claiming dole.
This took analysts by surprise, since they had been forecasting a further decline.
And the seasonally-adjusted jobless rate edged up to 7.0 percent in October from 6.9 percent in September, the first increase in unemployment in Germany since June 2009.
"All in all, the latest data show that the positive development on the labour market is continuing," labour agency chief Frank Weise insisted at a news conference.
But analysts were not so sure.
"While the increase is small and comes after a significant decrease in unemployment in September, the positive trend seems to be broken," said Berenberg Bank senior economist Christian Schulz.
With the economy likely to fall into mild recession in the winter, unemployment may rise further.
At 7.0 percent, the German unemployment rate was still very low by recent historical standards, Schulz said.
"Rising wages and a reasonably stable labour market should cushion the economic downturn somewhat, as long as the recession remains brief, but this requires that the eurozone debt crisis is brought under control quickly," the analyst said.
"The figures should be a reminder to the German government that the domestic economy is not insulated from the fall-out of the crisis," he concluded.
Jennifer McKeown, senior European economist at Capital Economics in London, similarly believed that the rise in seasonally-adjusted unemployment in October "confirms that the eurozone's largest economy is experiencing an underlying economic downturn."
Admittedly, unemployment was still considerably lower than elsewhere in the region, "but the recent fall in German survey measures of hiring suggests that October's deterioration might mark the start of a trend," she said.
© 2011 AFP