German unemployment rate steady in February

The German labour market remains resilient to the eurozone debt crisis and seasonally-adjusted unemployment held steady at low levels in February, new data showed yesterday.

“The labour market remains robust, despite the current economic weakness,” said the head of the Federal Labour Agency, Frank Weise.

Recent day showed that the German economy, the biggest in Europe, contracted by 0.2 per cent in the fourth quarter of 2011, but forward-looking indicators suggest the pause in growth may prove short-lived.

“But there is nothing to be seen of a economic weakening on the labour market,” Weise said.

“Employment is rising strongly. And unemployment hardly changed at all, despite the unusually cold weather since mid-January. Demand for labour remains high,” he said.

The latest data suggests that the German manufacturing machine is in its stride, in contrast to angst in France over a decline of manufacturing and to bad unemployment trends in several European Union countries.

The total number of people claiming dole rose by 25,717 to 3.11 million this month, equivalent to a jobless rate – which measures the unemployment total as a proportion of the population as a whole – of 7.4 per cent, up slightly from 7.3 per cent in January.

However, headline unemployment tends to rise in the winter months as sectors such as the construction sector slow down and lay off workers due to the cold weather.

Adjusted for such seasonal factors, the jobless total actually showed no change to 2.866 million, according to separate data calculated by the Bundesbank.

And the seasonally-adjusted jobless rate held steady at 6.8 per cent in February.

Nevertheless, the figures were slightly weaker than expected: analysts had been pencilling in a further decline in the jobless total this month.

But Annalisa Piazza of Newedge Strategy insisted the number “is not too bad”.

“In the past few months, the improvement of the labour market was surprisingly strong, despite signs of moderation in activity,” she said.

“As such, we would see today’s figures as a sign of ‘normalisation’ as the business cycle is far from its peak, even in the super-resilient Germany.”

Piazza ruled a sharp turn-around anytime soon.

“Indeed, there are clear signs that the labour market is still moving in the right direction,” she said.

Carsten Brzeski at ING Belgium saw the data as a signal “that the German job miracle is gradually coming to an end.”

Looking ahead, all available indicators still pointed to a further improvement in the German labour market, he said.

“However, the strong dynamics of last year will not be repeated this year. With lower growth and an unemployment rate close to the natural rate, the job miracle should gradually come to an end, entering a period of consolidation,” Brzeski said.

Christian Schulz, senior economist at Berenberg Bank, believed “the underlying positive trends in the German labour market remained intact”.

“However, some signs of a slowing dynamic were also reported,” he cautioned.

“With business and consumer confidence rebounding, Germany’s economy is set to grow from the second quarter onwards, which should provide further stimulus to the labour market as well,” the economist said.

“However, at record low unemployment levels, finding suitable candidates will continue to be an issue for German companies and drag on overall growth,” he concluded.