SA Unemployment: -34k (pan-German), -19k (West), -15k (East)

FRANKFURT (MNI) – The number of seasonally adjusted jobless in
Germany declined much more than expected in January by 34,000 to 2.849
million, the Federal Labour Office reported on Tuesday.

The seasonally adjusted jobless rate eased by 0.1 percentage point
to 6.7%. The median forecast of an MNI survey of analysts was for a
12,500 monthly drop in the number of unemployed and a jobless rate of
6.8%.

In unadjusted terms, unemployment rose to 3.082 million from 2.780
in December, surpassing the psychological important three million mark.
The seasonally adjusted unemployment rate rose to 7.3% from 6.6% in
December.

Job vacancies increased by 6,000 in January after rising 7,000 in
December. Payroll jobs, data for which are lagged a month, were up by
50,000 after +47,000 in November.

After unemployment fell a 20-year low average last year, the
outlook for the labor market is hazy, reflecting uncertainty over the
economic outlook, the Labour Office’s research arm IAB said in a recent
report.

The main scenario — assuming GDP growth of 1% this year — sees
unemployment falling by 50,000 on average to 2.92 million. Most of that
reduction would be due to a statistical carryover rather than to monthly
trends, the institute said.

Uncertainty is reflected in the recent volatility of leading
indicators. The Ifo’s Employment Barometer — based on around 7,000
monthly responses from businesses across key sectors — recovered
slightly again in January after falling significantly in December.

Similarly, a European Commission survey showed industry employment
expectations recovering in January for the first time since September,
while the outlook for the services rebounded after a sharp drop in
December.

The PMIs polls, on the other hand, flagged a slowdown in hiring in
January. The employment component fell back 1.6 points to 52.5, despite
a rise in the headline composite index from 51.3 to 54.0, its strongest
reading since June 2011.

Overall, the latest signals suggest that the labor market should
remain resilient. Yet upside surprises are limited, according to IAB, as
“further improvement would require significant economic growth.”

“Overall, the labor market will remain more robust than in previous
crises, but it is unlikely to show the a similarly strong immunity as in
2008/2009,” the IAB said.

Companies no longer benefit as much from previous wage-moderation
and structural adjustments, the IAB explained. At the same time, they
have drawn down the financial cushion that allowed them to retain
skilled labor to avoid future bottlenecks and may be hit harder than in
the previous crisis.

— Frankfurt bureau: +49 69 720 142, email: frankfurt@marketnews.com

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