Tags: Germany | economic | hiring | US

Germany Blames Warm Weather for Slow Employment

By    |   Friday, 30 May 2014 07:45 AM

Last winter, analysts attributed unexpectedly weak economic reports in the United States to severe weather conditions. We were told that hiring, retail sales and other measures were low because cold weather prevented economic transactions from being completed.

This week, economists in Germany noted that unseasonably warm weather increased unemployment.

In Germany, construction and other economic activity continued throughout a mild winter and now there is less hiring than economists expected to see in the spring. Because hiring is lower than expected, the seasonal adjustments economists apply to data are showing the number of unemployed has reached a five-year high.

From Germany, we can learn two important lessons.

First is that we should not pay attention to excuses for weak economic reports. The data tell the story and we need to stay focused on that fact. If the data show more people are out of work, that is important and the reason they are out of work is probably little more than a guess.

The second point is that seasonal adjustments can have a large impact on data. Because there were few layoffs among construction workers in Germany during the winter, economists are now saying that hiring is weak. The slowdown in the news reports might not actually be occurring. Assumptions about what should happen are driving the reported numbers.

U.S. economists also make adjustments to the data and their adjustments could be wrong. Rather than focusing on any individual economic report, investors should focus on the trends in the data. Listening to economists isn't really going to help increase wealth.

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MichaelCarr
Last winter, analysts attributed unexpectedly weak economic reports in the United States to severe weather conditions. We were told that hiring, retail sales and other measures were low because cold weather prevented economic transactions from being completed.
Germany, economic, hiring, US
260
2014-45-30
Friday, 30 May 2014 07:45 AM
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