Signs of pickup in German job market emerge

28th July 2005, Comments 0 comments

28 July 2005, NUREMBERG - Despite German unemployment edging up to 11.5 per cent in July, data released Thursday by the nation's labour agency point to a pickup underway in the nation's hard-pressed labour market.

28 July 2005

NUREMBERG - Despite German unemployment edging up to 11.5 per cent in July, data released Thursday by the nation's labour agency point to a pickup underway in the nation's hard-pressed labour market.

While the Nuremberg-based Labour Agency said the numbers out of work in seasonally unadjusted terms increased by 68,000 this month, the figures show the more market sensitive seasonally adjusted figure falling by a bigger-than-expected 42,000 to 4.81 million.

Analysts had forecast a more modest drop of 10,000 once the data was adjusted for seasonal factors and which they consider to be a more important gauge of underlining trends in the labour market.

Signs that the labour market in Europe's biggest economy might be improving come as the nation gears up a mid-September election.

This also follows a string of better-than-forecast economic data and surveys as a weaker euro and solid global growth help to underpin the country's key export machine.

Underscoring hopes that Germany is on course to more prosperous economic times, a key forward-looking survey released this week showed business confidence in the nation climbing to a five-month high in July.

The Labour Agency said it expects the numbers out of work to drop by 200,000 during August, September and October.

Unemployment stood at 11.3 per cent in June, with the unadjusted data often more the focus of Germany's political establishment.

But opinion polls show that Chancellor Gerhard Schroeder's ruling Social Democrats (SPD) have so far not benefited from the more positive outlook for both the economy and the labour market. The conservative opposition Christian Democrats (CDU) is retaining a commanding lead over the government in the build-up to the election.

July represented the fourth consecutive monthly fall in German seasonally adjusted unemployment and followed a revised 26, 000 drop in June.

Adding to the hopes about Germany's labour market, data also released Thursday showed employment in the country increasing by a seasonally adjusted 28,000 in June, which was considerably more than the 8,000 forecast by analysts and the 11,000 increase in May.

In particular, this follows a series of tough welfare and labour market reforms introduced by Schroeder aimed at bolstering Germany's low-wage sector and forcing the unemployed to accept work, which economists say have been the key driving forces behind the recent improvement in the adjusted jobless data.

"I am convinced that we have created the conditions for growth and employment," said Labour Minister Wolfgang Clement on Thursday.

But the opposition claimed that the government has given up the fight against unemployment with CDU general secretary Volker Kauder saying the SPD's policies were the cause of the high jobless numbers.

Economists also remain sceptical about whether the labour market had reached a turning point, especially as economic growth in the country is expected to fall short of a very modest one per cent this year. At the same time, a series of big layoffs by corporate Germany were still working their way through the system.

Commerzbank AG economists told clients in a note about the latest jobless numbers: "The development should not, however, be seen as a real turning point in the labour market."

Moreover, high unemployment has dampened consumer spending in Germany, leaving exports as the key pillar for growth. Despite a rise in German business and investor confidence, consumer confidence fell for a fourth month, a survey released Wednesday showed.

Commenting on the data, labour office chief Frank-Juergen Weise said the rise in the headline unemployment in July had been expected.

But he said this was normal for this time of the year with the rise lower than at the same time in previous years.

"Fortunately, the summer break had only a marginal impact on the job market in this year," he said.

While the unemployment rate in Germany's more economically important western half stood at 9.6 per cent in July, in east Germany it came in at 18.6 per cent.


Subject: German news

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