German unemployment falls more than expected

1st December 2005, Comments 0 comments

1 December 2005, BERLIN - The number of people out of work in Germany recorded a bigger-than-forecast fall in November, the federal labour office said Thursday, with the unemployment rate sliding to 10.9 per cent.

1 December 2005

BERLIN - The number of people out of work in Germany recorded a bigger-than-forecast fall in November, the federal labour office said Thursday, with the unemployment rate sliding to 10.9 per cent.

The 25,000 drop in seasonally unadjusted terms last month brought the numbers without a job in Europe's biggest economy down to 4.531 million with mild weather and the creation of a low-wage sector in the country contributing to the decline.

Unemployment stood at 11 per cent in October. However, the November tally was still 274,000 more than the same month last year.

In the more market-sensitive seasonally adjusted terms, the total numbers out of worked dropped by 53,000 in November to 4.753 million. Economists had expected a fall of only about 20,000 last month.

The November fall represented the biggest monthly drop in seasonally adjusted terms since April with unemployment normally starting to increase in November as the cold winter months hit jobs in sectors such as the service industry and the building trade.

Last month's decline also helps to ease some of the pressure on Chancellor Angela Merkel's new government, which has been criticized for focusing on fiscal consolidation and stepping back from tackling head-on the structural problems facing the nation's labour market.

Germany's Minister for Labour Franz Muentefering seized on the new data as confirming the Christian Democrat-Social Democrat coalition's labour market policy.

"This is the most favourable development in a November since reunification," (in 1990) said Muentefering, adding that the government would pursue a course on the labour market with "confidence and courage".

However, the outlook for Germany's job market remains downbeat with the build-up to the release of the November data accompanied by a string of big companies announcing a new round of lay offs.

This included an announcement by the giant German telecoms group, Deutsche Telekom AG that it planned to slash 32,000 jobs from its workforce.

Adding to the somewhat bleak picture for the German labour market, labour office board member Heinrich Alt warned Thursday that cold winter weather during January and February could push the jobless numbers back up to five million.

Unemployment came in at 9.4 per cent last month in the western part of the country and 16.9 per cent in the hard-pressed economy in Germany's eastern half.

Along with high energy prices and low wage growth, job fears have hit private consumption in Germany with stagnating household spending having acted as a major drag on the country's growth.

After a slow start to the year, the German economy chalked up a solid 0.6 per cent growth rate in the third-quarter.

As a result, economists have been revising up their 2006 growth forecasts for Germany to about 1.5 per cent. However, this still falls short of the two per cent growth rate labour analysts say is needed to generate hiring in the country.

The labour office research group, the Institute for the Labour market and professional research (IAB) said Wednesday it expects unemployment to fall by only 60,000 next year compared to 2005.

DPA

Subject: German news

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