6/3/2020 Germany’s unemployment rate rises for first time since 2013 | Financial Times

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Germany’s unemployment rate rises for first time since 2013
Number of jobless Germans climbs most in a decade

© Bloomberg

Adam Samson in London MAY 29 2019

Germany’s jobless rate this month rose for the first time in more than five years in
the latest sign of the struggles facing Europe’s biggest economy.

The unemployment rate climbed to 5 per cent in May from April’s 4.9 per cent —
the lowest since at least 1991, according to data from the country’s central bank. It
marked the first monthly increase since November 2013.

The tick higher in the jobless rate came as 60,000 more people were considered
unemployed in May from the previous month, the largest such increase in a
decade. Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics,
notes that the rise was partly due to the reclassification of some workers; however,
he said it still represented a slowdown in the country’s labour market.

“The solid German employment picture will not spontaneously combust this year,
but the rate of improvement will deteriorate significantly, reflecting the gruelling
slowdown in manufacturing,” he said.

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Germany’s unemployment rate remains close to the lowest level since the
reunification in 1990 and significantly below that of major eurozone peers such as
France. Most economists consider the German labour market to be one of the most
robust of global developed economies.

However, the German economy has been showing mounting signs of strain during
2019. The trade dispute between the US and China has deeply affected sentiment
among German business leaders, who worry the country’s large manufacturing
sector will become collateral damage in the row.

At the same time, there have been indications that global growth may be slowing,
another negative for a large open economy like Germany’s.

German manufacturers expect to reduce the number of people they employ — a

trend that has been present for the past three months, according to a survey
released this week by the influential Ifo Institute in Munich.

“Willingness to hire new recruits has been in a continuous decline since the
beginning of 2018,” Ifo said. It added that most employment growth has taken
place in the services sector, but even there “the willingness to hire is cooling off”.

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6/3/2020 Germany’s unemployment rate rises for first time since 2013 | Financial Times

The sense of angst has rippled into Germany’s bond market, with investors shifting
into the perceived shelter of German sovereign debt. The benchmark 10-year Bund
yield slipped to minus 0.16 per cent on Wednesday, from positive 0.2 per cent at
the beginning of March. Declines in bond yields reflects a rise in prices.

Meanwhile, Germany’s main stock barometer has fallen 3.8 per cent this month,
leaving it poised for the worst performance since the global market ructions at the
end of last year.

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