September 27, 2012

German Unemployment Up for Sixth Month

Still near lowest level since reunification, but rise indicates slowdown

Germany saw the number of jobless workers rise again in September for the sixth month in a row, as strong demand within the country could not fill the gap left by a slowing global economy. Still, unemployment was near its lowest level since reunification, and the overall rate held steady at 6.8%.

Reuters reported Thursday that even as the numbers rose by 9,000, economists predicted that unemployment would continue to rise in the coming months as slowing demand in both the eurozone and the world in general will continue to take a toll on the eurozone’s top economy.

"The development is of course still very, very moderate," said Peter Meister in the report. Meister, of BHF Bank, added, "In the next couple of months seasonally adjusted unemployment will rise somewhat more strongly than has been the case until now."

A boost in unemployment could exact a toll on Chancellor Angela Merkel of Germany in next year’s election, and could contribute to mounting reluctance among Germans to contribute to eurozone bailouts for countries, like Greece, that they have criticized for their fiscal woes.

"The labor market is, slowly but surely, losing steam and all forward-looking indicators also don't bode well," said ING economist Carsten Brzeski in the report. He added, "It is doubtful whether private consumption can really take over the baton as main growth driver for the German economy."

German business sentiment was down as well for the month, as previously reported by AdvisorOne. And employers cut jobs in a continuing indication of weakness in the global economy.

Andreas Scheuerle at Dekabank said in the report, "The debt crisis is taking its toll. Companies are holding back on investing."

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