German unemployment increased unexpectedly in July, its biggest rise since May last year. This is a setback for domestic demand, which is expected to drive growth in Europe’s largest economy this year.
The number of unemployed increased by 9,000 last month after rising 1,000 in June, according to the Federal Labour Agency. It was forecast to fall by 5,000.
However, the German labour market remains robust. The jobless rate remained unchanged at a seasonally adjusted 6.4 per cent in July, as expected by economists. The rate has been at this level since April, the lowest since German reunification.
In the meantime, confidence among US consumers experienced a substantial deterioration in July, according to a report published last week by the Conference Board. The board’s consumer confidence index tumbled to 90.9 in July from a downwardly revised 99.8 in June. Economists had predicted a much more modest decrease to 99.6.
Householders were especially less optimistic about current and future job growth. Lynn Franco, director of Economic Indicators at the board, said: “A less optimistic outlook for the labour market and perhaps the uncertainty and volatility in financial markets prompted by the Greek debt crisis and China slowdown, appears to have shaken consumers’ confidence”. But she added that “the index remains at levels associated with an expanding economy and a relatively confident consumer”.
Finally, in the United Kingdom, economic growth accelerated in the second quarter of this year, meeting expectations, as the country’s industrial sector posted a strong recovery, business services strengthened and North Sea output surged.
The 0.7 per cent rise in GDP marks a tenth straight quarterly expansion and follows a 0.4 per cent advance in the previous three months. Output was 2.6 per cent higher than a year earlier, also in line with forecasts.
Last year the UK recorded its fastest growth rate in eight years, and last month Bank of England Governor Mark Carney said the decision on the next interest rise from their record low would come into focus around the end of the year.
This report was compiled by Bank of Valletta plc for general information purposes only.