Recovery hopes as Germany posts surprise jobless fall
Analysts were divided on how to interpret the figures, with some warning that the worst was still to come for Germany's until-now resilient labour market.Berlin -- Hopes grew Thursday that Germany, Europe's economic powerhouse, could lead the continent out of its deepest recession in decades as it posted a surprise fall in unemployment in October.
But analysts were divided on how to interpret the figures, with many warning the worst was still to come for Germany's until-now resilient labour market.
The raw unemployment rate fell to 7.7 percent from 8.0 percent in September, official data showed, as the country, which accounts for one-third of eurozone output, showed signs of emerging from its worst slump in 60 years.
Adjusted for seasonal effects, it was the fourth consecutive monthly decline in unemployment and wrong-footed analysts surveyed by Dow Jones Newswires who had forecast slightly longer jobless lines.
The Federal Labour Agency, which published the figures, said: "In comparison to the first half of the year and given the overall economic situation, this is a surprisingly positive trend."
Some analysts also hailed the data, with Jennifer McKeown from Capital Economics saying: "Signs of improvement in the labour market support our view that Germany will lead the eurozone economic recovery over the coming quarters."
Germany, which vies with China for the title of world's leading exporter, has suffered more than most as demand for goods dried up during the worst of the global financial crisis.
However, as the green shoots of recovery begin to take hold, Germany seems also to be rebounding faster than many of its European neighbours as exports take off again.
The new labour minister, Franz Josef Jung, said: "Our unemployment figures are more positive (than our European neighbours) even though we have been hit harder by the crisis."
Business confidence, as measured by the closely followed survey carried out by the Ifo institute, rose in October to its highest level in a year and other leading indicators also show Germany's economic health improving slowly.
Nevertheless, others warned against celebrating too early and pointed to the impact of state subsidies allowing firms to cut working hours while maintaining salaries for a limited period of time, which have thus far kept a lid on an explosion in jobless claims.
The fear is that the unemployment rate could rise sharply if firms decide to lay off the subsidised staff when the scheme ends.
Alexander Koch from Unicredit said he did not believe the figures heralded a true turnaround in the German labour market.
"The official unemployment figures are still dampened due to statistical changes. Furthermore, the high number of government-subsidised short-term employees strongly helps to mitigate the rise in unemployment," he said.
He forecast a "substantial acceleration in unemployment from the end of this year, well into 2010."
The head of the labour agency, Frank-Juergen Weise, was also guarded in his optimism. "We should state clearly -- it's less bad than expected," he told news channel N24.
"It is the case that the strain will unavoidably increase in 2010," he added.
Jung also said the figures "were not a sign of a turning point."
Chancellor Angela Merkel's government, formally sworn in for a second four-year term on Wednesday, expects a rise in unemployment, to an average of 4.1 million in 2010.
Merkel is relying on a 24-billion-euro (36-billion-dollar) package of tax cuts to pep up the economy, despite a vast and growing mountain of debt.