German jobless rate unexpectedly rises to highest since 2021

GERMANY’S unemployment rate unexpectedly rose to the highest level in 2 1/2 years, a sign that the weakness of Europe’s biggest economy is starting to impact its labour market.

It reached 5.9 per cent in November, up from 5.8 per cent the previous month, the Federal Labor Agency said in a statement on Thursday (Nov 30). Joblessness increased by 22,000, slightly exceeding the median economist estimate in a Bloomberg survey.

“The economic slump is leaving its mark,” said Andrea Nahles, head of Germany’s Federal Labor Agency. “Employment is now only growing marginally and demand for workers continues to weaken.”

The labour market has been a resilient part of an economy that’s struggling to recover from its energy-induced crisis last winter. Output contracted in the third quarter and the Bundesbank reckons the country is in a recession.

Half of German companies are struggling to fill vacancies due to an acute skilled labour shortage. This could create a loss of about 2 per cent of gross domestic product, according to the industry lobby DIHK Chambers of Industry and Commerce.

Germany’s fiscal chaos, following a shock judgement by its top court, poses another risk to the recovery. European Central Bank president Christine Lagarde and Bundesbank chief Joachim Nagel have called on Berlin to create clarity on the budget soon. BLOOMBERG