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German Unemployment Rises More Than Expected in August

German unemployment rose more than expected in August, showing the first cracks in what had been until now a very resilient labour market.

The Federal Labour Office said on Thursday that the number of people out of work increased by 18,000 in seasonally adjusted terms to 2.63 million. Analysts polled by Reuters had expected that figure to rise by 10,000.

The seasonally adjusted jobless rate remained stable at 5.7%.

“The summer break and economic weakness are leaving their mark on the labour market. Nevertheless, it is still in a solid basic condition”, labour office head Andrea Nahles said.

In August, there were 771,000 job openings, 116,000 fewer than a year ago. Although the Federal Labour Office has seen a slowdown in labour demand in the last year, it remains at a high level.

Germany’s labour market has been very strong but is now losing steam as activity weakens.

The German economy – Europe’s largest – stagnated in the second quarter, showing no sign of recovery from a winter recession and cementing its position as one of the world’s weakest major economies.

Germany’s economic situation is currently being portrayed as “the sick man of Europe,” a term coined by Berenberg economist Holger Schmieding in 1998.

But he doesn’t think that this label can be applied today, as the situation in the labour market differs.

“Germany is now having record employment whereas over the 1990s, employment in Germany was coming down and unemployment was rising,” Schmieding said.

According to data from the Federal Labour Office, the number of employed persons in July rose by 15,000 compared to the previous month. At 45.92 million persons, it was 339,000 higher than in the previous year. Reporting of employment data lags unemployment data by a month.

The economy’s main problem today is labour shortages.

“Germany is a victim of its own success,” Schmieding said. “Germany has a bigger labour shortage simply because it’s been so successful already in utilising its human potential.”

Source : Reuters

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