Bloomberg News

German Jobless Fell in March as Economy Showed Resilience

March 29, 2012

The number of people out of work fell a seasonally adjusted 18,000 to 2.84 million, the Nuremberg-based Federal Labor Agency said today. Photographer: Michele Tantussi/Bloomberg

The number of people out of work fell a seasonally adjusted 18,000 to 2.84 million, the Nuremberg-based Federal Labor Agency said today. Photographer: Michele Tantussi/Bloomberg

German unemployment fell more than forecast in March, adding to evidence that growth in Europe’s biggest economy is gaining traction as the debt crisis recedes.

The number of people out of work fell a seasonally adjusted 18,000 to 2.84 million, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decline of 10,000, the median of 36 estimates in a Bloomberg News survey showed. The adjusted jobless rate slipped to 6.7 percent, a two-decade low.

“Hiring hasn’t halted this quarter after the fourth- quarter contraction,” said Thomas Costerg, an economist at Standard Chartered Bank in London. It “says a lot about the underlying strength of the German economy.” Unemployment will continue to decline in coming months as the pace of economic growth accelerates, he said.

Falling joblessness underscores Germany’s resilience in the face of the debt crisis that Chancellor Angela Merkel says may have peaked. While the 17-member euro-region economy will shrink 0.3 percent in 2012, Germany’s economy will grow 0.6 percent, the European Commission forecast. Investor confidence is at its highest in 21 months and business confidence at an 8-month high.

The euro was little changed after the report at $1.3324 as of 10:45 a.m. in Berlin.

‘Moving Sideways’

The economy “may still be moving sideways” after it shrank 0.2 percent in the fourth quarter, yet indicators suggest “a rejuvenation” in the early part of 2012 as lower unemployment boosts household spending, the Bundesbank said on March 19. Two days later, the Essen-based RWI, one of four economic-institute groups that advise Merkel’s government, raised its outlook for growth this year to 1 percent.

Bayerische Motoren Werke AG (BMW), the world’s largest maker of luxury vehicles, plans to add 4,000 jobs this year, the Munich- based company said March 12. Heavy-machinery maker Liebherr GmbH (LIEB) may create 1,200 new jobs in the eastern state of Mecklenburg- Western Pomerania as it boosts crane sales to Russia and Brazil, Managing Director Thomas Mueller said on Feb. 27.

German companies may create as many as 250,000 jobs this year, including 80,000 in health and social services, 50,000 in IT and 40,000 in engineering, the DIHK industry and trade chambers said last month, citing a survey.

ECB Loans

The “Mittelstand,” the 3.4 million small and mid-sized companies that account for most of Germany’s exports, may benefit from the more than 1 trillion euros that the European Central Bank injected into the banking system to avert a credit crunch, ECB President Mario Draghi said in Berlin this week.

More than half of the 800 lenders that tapped the ECB’s Feb. 29 tender of three-year loans were German, most of them small savings and cooperative banks that serve the Mittelstand, Die Welt newspaper said March 4, citing unnamed bank officials.

The ECB’s loans and a successful Greek debt-swap that led to a second bailout have helped ease concerns of contagion, prompting Merkel to say in Rome on March 14 that “we’ve come a good way along the mountain path” to resolving the crisis. European governments are meanwhile preparing for a one-year increase in the ceiling on rescue aid to 940 billion euros ($1.3 trillion) to keep the crisis at bay, according to a draft statement written for finance ministers due to meet tomorrow.

‘Die Down’

“It looks like the crisis may slowly die down,” Hendrik Enderlein, a political scientist at the Hertie School of Governance in Berlin, said on Deutschlandradio today. “The embers are still glowing but the flames aren’t burning anymore.” Increasing the debt-crisis firewall will “put out the fire” entirely.

Germany’s adjusted jobless rate was 5.8 percent in January, according to the latest harmonized figures from the Paris-based Organization for Economic Cooperation and Development. That compared with 10 percent in France, 9.2 percent in Italy and a euro-area average of 10.7 percent.

Even so, hiring plans face a challenge as moderate wage claims that helped the economy end a recession in 2010 are abandoned in sectors from engineering to public services. IG Metall, Europe’s biggest labor union, representing 3.6 million workers, is demanding a 6.5 percent wage increase, as is the Ver.di union for public and bank-sector workers.

Demand for workers remains high in some industries, the labor agency’s BA-X index showed yesterday, with a measure of employment intentions rising in March after falling last month.

“The current economic weak phase is leaving hardly a trace on the labor market,” said Frank-Juergen Weise, the Labor Agency’s head.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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