Unemployment falls dramatically in October

2nd November 2005, Comments 0 comments

2 November 2005, BERLIN - German unemployment fell dramatically in October, the Federal Labour Office reported Wednesday, with the jobless rate sinking to 11 per cent as growth in Europe's biggest economy gained momentum.

2 November 2005

BERLIN - German unemployment fell dramatically in October, the Federal Labour Office reported Wednesday, with the jobless rate sinking to 11 per cent as growth in Europe's biggest economy gained momentum.

The improvement in Germany's fragile labour market helped to ease some of the pressure on the nation's main political main parties as they battle to cobble together a new "grand coalition" government. The jobless rate stood at 11.2 per cent in September.

The fall in the total numbers out of work was more than double what analysts had forecast. Joblessness in the market-sensitive seasonally adjusted terms dropped by 36,000 in October to 4.801 million. Economists had forecast a fall of 15,000.

The reduction in the country's dole queues during October also reflected moves by employers to take on low-paid workers following labour market reforms introduced by outgoing Chancellor Gerhard Schroeder's Social Democrat-led government.

While unemployment in the western part of the country fell by a seasonally adjusted 21,000 during October, in the eastern part of the nation the jobless number declined by 15,000.

In unadjusted terms numbers, which is the figure that politicians normally use to measure unemployment, those without a job dropped by 94,000 to 4.556 million.

This was also more than double the average annual fall of 40,000 recorded over the last five years and far larger than the 50,000 drop registered in October last year.

Unemployment has fallen by about 140,000 over the last five months, labour office chief Frank-Juergen Weise said when releasing the data.

The jobless data comes in the wake of a string of better-than- expected German economic figures and sentiment surveys with optimism about the outlook for German exports helping to power business confidence to a five-year high in October.

At the same time, the surveys and company comments point to the long-run of big job cuts in the country coming to an end.

High unemployment, soaring oil and stagnating wages have cast a shadow over retailing in Germany.

However, even sentiment among Germany's hard-pressed consumers has improved as oil prices have retreated and the nation's political leaders have moved to form a new government in the wake of September's inconclusive national election.

But with Germany expected to be lucky to report a growth rate of one per cent this year and about 1.4 per cent in 2006, analysts are sceptical about the prospects of a major turning around on the nation's labour market.

This is particularly the case as analysts have marked out a two per cent growth rate as when the economy starts to create jobs.

Labour office executive member Heinrich Alt warned that the approach of winter could mean a pick up in unemployment as jobs started to dry up in weather-sensitive sectors such as the building industry.

This could mean, he said, unemployment climbing back up to the record five million it hit early this year following the launch of a new round of tough welfare benefit reforms by the Schroeder government.

Matthias Wissmann, an economics expert with Chancellor-designate Angela Merkel's conservative Christian Democrats, said the October fall was no a signal of a upswing and that further job market reforms were needed.

© DPA with Expatica

Subject: German news

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