German jobless rate drops sharply in April

29th April 2010, Comments 0 comments

German unemployment dropped sharply this month as warm weather helped a recovery of Europe's top economy and raised the chances of joblessness remaining under the symbolic four million mark.

Unemployment dropped to 8.1 percent of the workforce from 8.5 percent in March, according to unadjusted figures released Thursday by the Federal Labour Agency that serve as a basis for public debate.

"There was an unexpectedly strong springtime upturn on the labour market in April," said the agency's head, Frank-Juergen Weise.

Improvements were seen in the tourism and construction sectors that had been hit by particularly cold and snowy winter weather, while an earlier end to the Easter holiday also probably contributed to the result.

Around 3.4 million people were looking for work in all, or 162,000 fewer than in the previous month, the labour agency said.

Labour Minister Ursula von de Leyen told a press conference: "I think we will remain below the four million unemployed mark this year, even in bad months."

The seasonally-adjusted rate favoured by analysts fell for the fifth straight month to 7.8 percent, the lowest level since December 2008, Capital Economics senior European economist Jennifer McKeown noted.

Analysts had forecast an adjusted rate of 8.0 percent.

The drop "highlights the current contrast between the German economic climate and the periphery's troubles," McKeown said in reference to eurozone countries like Greece, Portugal and Spain.

ING senior economist Carsten Brzeski put the improvement down to government labour market policies, in particular a subsidised short-work programme that lets companies cut workers' hours and which has been extended to March 2012.

Given the uncertainty facing European economies, "the labour market was a rock in the storm," von der Leyen told a press conference.

IHS Global Insight senior economist Timo Klein noted that "the latest level of joblessness is now only slightly higher than at the end of the previous economic boom" in October 2008.

Trouble spots remained however in parts of eastern Germany, and the highest unemployment rate, 14.2 percent, was recorded in Berlin.

Government figures have shown meanwhile that around 1.1 million jobs were saved by the short-work scheme, on which 890,000 workers depended in December.

The latest unemployment figures were published two days after the GfK research group said German consumer confidence had risen more than expected.

UniCredit economist Alexander Koch noted however that companies which had cut workers hours would normally raise them again as business improved, and as a result, "firms will likely stay cautious in hiring new staff."

Employment expectations were nonetheless more positive in the latest poll by the Ifo economic institute, which has climbed back to its highest level since May 2008.

But economists say the economic recovery could falter later this year, and von der Leyen acknowledged that companies which depended on European markets would have to contend with several unknowns, including credit availability.

© 2010 AFP

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