German unemployment rises slightly more than expected in July

[BERLIN] The number of unemployed people in Germany rose slightly more than expected in July and came close to the politically ‌important 3 million mark in seasonally adjusted terms, according to Labour Office data released on Friday (Jul 31).

In seasonally adjusted terms, the jobless figure grew by 6,000 to 2.99 million, Labour Office figures showed, while analysts polled by Reuters had predicted an increase of 5,000.

The seasonally adjusted jobless rate stood at 6.4 per cent, up from 6.3 per cent the previous month.

“The weak trend observed in the labour market over recent months is continuing,” said Daniel Terzenbach, a member of the Regional Management Board of the Federal Employment Agency. Gross domestic product in Europe’s largest economy grew more than expected in ‌the second quarter, but risks loom as hostilities flare up again between Iran and the US, meaning prices could stay high for longer than initially expected, taking a toll on investment and consumption.

Labour market data typically react with a lag to geopolitical shocks. Early labour market indicators suggest that, at best, the labour market will move sideways over the coming months, said Marc Schattenberg, economist at Deutsche Bank Research. “However, if the German economy continues to perform as robustly as it did in the second quarter, the labour market is likely to regain momentum from autumn onwards,” Schattenberg said.

The overall unadjusted number of unemployed people ticked over the 3 million mark in July.

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The three million mark was surpassed for the first time in a decade last year in August, showing the toll of economic stagnation on the labour market.

“Unemployment and underemployment are rising noticeably in July, primarily due to seasonal factors,” Terzenbach said. Adding to the gloom, inflation accelerated to 2.8 per cent year-on-year in July from 2.4 per cent in the previous month on higher energy prices caused ‌by the Iran conflict, data showed on Thursday. “If sustained, the rebound in GDP growth eventually will feed through to the labour market,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics. “For now, however, the near-term outlook remains difficult.”

Labour demand remains weak, the office said. In total, 653,000 job openings were ​registered with the labour office in ​July, 2⁠5,000 more than a year ago. REUTERS