German Unemployment Falls as Economy Staves Off Crisis

Tuesday, 03 Jan 2012 11:39 AM

 

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German unemployment fell more than forecast in December as exports of cars and machinery boomed and one of the mildest winters on record helped support jobs in construction.

The number of people out of work fell a seasonally adjusted 22,000 to 2.89 million, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decline of 10,000, the median of 20 estimates in a Bloomberg News survey showed. The adjusted jobless rate dropped to 6.8 percent.

German companies, working off orders for exports and investment goods, have so far defied a debt crisis the European Commission says risks triggering a recession in the euro area. The Munich-based Ifo institute’s measure of business confidence rose unexpectedly in December, and polls show most Germans see their job as secure even as Europe’s biggest economy slows.

“Forward-looking indicators including Ifo underscore that the German jobs motor is fundamentally intact,” said Johannes Mayr, a senior economist at Bayerische Landesbank in Munich.

The euro was up 0.4 percent at $1.2983 after the report as of 10:14 a.m. in Berlin. The benchmark DAX index gained 1.4 percent.

Audi, Airbus

Carmaker Audi AG said on Dec. 27 that it may add 1,200 jobs this year as it expands investment in electric vehicles and light-metal technology. Airbus SAS, maker of the A380 superjumbo whose German production sites include Hamburg, said Dec. 14 that it’s seeking 4,000 more workers. Of Hamburg’s largest 200 employers, 42 percent said they plan to boost hiring in 2012, the Abendblatt newspaper reported Dec. 30, citing its own poll.

With the exception of a 6,000 drop in October, German unemployment has now fallen in every month since June 2009. The average jobless total in unadjusted terms for 2011 squeezed below the 3 million mark at 2.97 million, the lowest since 1991, Labor Agency head Frank-Juergen Weise said.

“German unemployment mastered the dual impact of the debt crisis and weakening economic growth in 2011 but these risks remain, accompanying us as we enter the new year,” Weise told reporters in Nuremberg.

The jobs market also benefited from what the DWD weather bureau said were the fifth-warmest average national temperatures in December since 1881. That enabled German building companies, which normally shed as many as 150,000 staff most winters, to keep workers on sites, Harald Schroeer, the deputy managing director of the ZDB construction group, said in an interview.

Job Security

Across Germany, 90 percent of voters said they view their jobs as secure, a poll of 2,000 respondents by Ernst & Young International for Die Welt newspaper published today showed. Forty percent said they expect the economy to weaken in 2012.

German exports of cars, machines and services breached the 1 trillion euro mark ($1.3 trillion) for the first time in 2011, according the BGA export group. Yet continued export growth, which may be half the 12 percent reported in 2011, depends on the euro region solving its debt crisis in a “sustainable” way, the BGA said on Dec. 30.

Germany may depend on demand from China this year as budget cuts and belt-tightening causes sales to ebb to Germany’s European partners, the destination for 60 percent of its exports, University of California Berkeley economist Barry Eichengreen said in a Dec. 30 interview published in the Financial Times Deutschland.

Forecasts Slashed

Ifo and the Bundesbank both slashed their forecasts last month for 2012 economic growth in Germany as a result of the debt crisis on Germany’s main euro-area trading partners, to 0.4 percent from 2.3 percent and to 0.6 percent from 1.8 percent respectively. Chancellor Angela Merkel’s government estimates that the economy grew 2.9 percent in 2011.

For now, lower unemployment is boosting consumer spending, helping drive domestic demand, Mario Gruppe, an economist at NordLB in Hanover, said by phone.

“Germany won’t be able to avoid an economic cooling down, so there will also be effect on the labor market,” he said. “But we saw in the last crisis that the German labor market held up astounding well in global competitiveness, so the effects could be negligible.”

Germany’s adjusted jobless rate was 5.5 percent in October, according to the latest harmonized Organization for Economic Cooperation and Development figures. That compared with 9.8 percent in France, 8.5 percent in Italy and a European Union average of 9.6 percent.

© Copyright 2014 Bloomberg News. All rights reserved.

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