Tags: EU | Germany | Economy

German Jobless Rate Rises to 8.7 Percent

Thursday, 25 Feb 2010 05:43 AM

Unemployment in Germany, Europe's biggest economy, edged up only slightly to 8.7 percent in February despite a particularly hard winter, official data showed Thursday.

The unadjusted jobless rate was up from 8.6 percent in January, with a total of 3.643 million people registered as unemployed, the Federal Labor Agency said. That was an increase of 26,000 over the previous month and 91,000 from last February.

The rise was in line with the usual seasonal increase in February, when winter weather often weighs on jobs in industries such as construction, the agency said. This year has seen a harsh winter in Germany, with persistent snow.

In seasonally adjusted terms, the unemployment rate crept up to 8.2 percent after standing at 8.1 percent for three months, with 7,000 more people out of work.

The effects of the economic crisis on the labor market were "moderate" in February, labor agency board member Heinrich Alt said.

Germany's economy returned to modest growth last year after a sharp recession but stagnated in the fourth quarter. However, exports — Germany's traditional economic motor — were up 3 percent over the previous three-month period.

Unemployment also has been tamed by a government-backed program that allows companies to put workers on reduced hours in an effort to avoid layoffs.

That, along with the economic recovery, was a key explanation for the limited rise in unemployment this month, said Timo Klein, an economist at IHS Global Insight in Frankfurt.

At the end of last year, 890,000 employees were involved in the program, down from a peak of more than 1.5 million last May, the labor agency said.

Consumer confidence in Germany has slipped recently amid expectations that unemployment will increase.

"Looking ahead, things will probably get worse before they get better and unemployment is still bound to increase somewhat," said Carsten Brzeski, an economist at ING in Brussels. "However, the worsening should be short-lived."

"Leading indicators, historical evidence and recent wage settlements with job guarantees all point to a stabilization of the labor market around the summer," he added.

Klein predicted "relatively small" increases in seasonally adjusted unemployment over the coming months, with the rate peaking at about 9 percent early next year.

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