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German Unemployment Rose Less Than Forecast in December

January 03, 2013

German Unemployment Increased Less Than Forecast in December

Germany’s economy, Europe’s largest, may have contracted markedly in the fourth quarter after the euro area’s succumbed to recession, the Bundesbank said on Dec. 17. Still, business confidence increased for a second month in December after demand from outside the region boosted factory orders and exports. Photographer: Michele Tantussi/Bloomberg

German unemployment increased less than economists forecast in December even as Europe’s debt crisis curbed company investment and economic growth.

The number of people out of work rose a seasonally adjusted 3,000 to 2.942 million, the Nuremberg-based Federal Labor Agency said today. Economists predicted an increase of 10,000, the median of 19 estimates in a Bloomberg News survey showed. The adjusted jobless rate held steady at 6.9 percent, close to a two-decade low.

Germany’s economy, Europe’s largest, may have contracted markedly in the fourth quarter after the euro area’s succumbed to recession, the Bundesbank said on Dec. 17. Still, business confidence increased for a second month in December after demand from outside the region boosted factory orders and exports.

“The German labor market is showing signs of cooling, which isn’t that surprising given the economic slowdown in the course of 2012, said Thilo Heidrich, an economist at Deutsche Postbank AG (DPB) in Bonn. ‘‘If the economy stabilizes and recovers in 2013, the labor market could end its weak phase already at the end of the year.’’

The euro was little changed after the report and traded at $1.3139 at 11:04 a.m. in Frankfurt. The benchmark DAX index dropped 0.2 percent to 7760.88, while the Stoxx Europe 600 Index rose 0.2 percent to 286.0.

House Prices

Spain’s registered unemployment fell for the first time in five months in December as service industries boosted hiring over the holiday season.

In the U.K., house prices declined in December and may fall ‘‘modestly’’ over 2013 because of a weak economic recovery, Nationwide Building Society said. A gauge of construction activity dropped more than economists forecast. At the same time, U.K. lenders increased the availability of mortgages and company loans ‘‘significantly’’ in the fourth quarter, the Bank of England said.

In the euro area, lending to households and companies contracted for a seventh month in November as the recession damped demand for credit. Switzerland’s KOF economic indicator weakened for a third month in December, while manufacturing output contracted less than economists forecast.

The Bundesbank predicts the German economy to expand 0.4 percent this year even as the euro area fights its second recession in four years. The European Central Bank lowered its forecast on Dec. 6 and now predicts an economic contraction of 0.3 percent in the 17-nation region in 2013.

‘Difficult Year’

‘‘We expect a difficult year for the German labor market,’’ Frank-Juergen Weise, President of the Federal Labor Agency, said in a press conference. ‘‘But we don’t think there’ll be any dramatic shocks and there is good reason to believe in an improvement after 2013.”

Schaeffler AG, the roller-bearing maker that is the biggest investor in car-parts manufacturer Continental AG (CON), last month lowered its 2012 sales forecast because of weaker demand in Europe and Asia.

Siemens AG (SIE) said on Dec. 19 it is eliminating 1,100 jobs at two energy units in Germany, preparing for years of subdued demand for gas-fired turbines made at its Berlin plant as competition increases and utilities hesitate to invest.

Outside Europe

Some German companies are selling more to faster-growing regions, offsetting weaker demand from the euro area, its largest export market. Shipments to countries outside the European Union increased 9.9 percent in the third quarter from a year earlier, the Federal Statistics Office said on Dec. 4, with those to the U.S. surging 25.7 percent.

That’s helping to boost optimism among German manufacturers, according to a report released today by state- owned development bank KfW Group.

“German companies, large and small, are already looking beyond the current weak phase and are expecting a recovery in the spring,” Joerg Zeuner, KfW chief economist, said in an e- mailed statement.

Bayerische Motoren Werke AG, the world’s biggest maker of luxury cars, said on Dec. 7 it is targeting higher sales and profit in 2013, boosted by growth in the U.S. and China.

China today reported an increase in a services-industry gauge, adding to signs that the world’s second-biggest economy is rebounding after seven-quarter slowdown. The non- manufacturing purchasing managers’ index was at 56.1 in December after a 55.6 reading the previous month, the National Bureau of Statistics and China Federation of Logistics & Purchasing said in Beijing today.

Mortgage Applications

The U.S. will report mortgage applications and initial jobless claims today and the Bloomberg Consumer Comfort Index is set to give the latest reading on sentiment in the world’s biggest economy.

In Germany, small and medium-sized companies plan to add employees this year even as most of them expect the economy to stagnate, a poll of more than 3,000 businesses by the BVMW lobby of medium-sized firms showed on Dec. 27.

The economic environment will be more difficult this year than in 2012, German Chancellor Angela Merkel said on Dec. 31. Europe’s sovereign debt crisis is “far from over,” though progress has been made and the “reforms that we’ve agreed on are starting to take effect.”

Still, the euro region’s jobless rate rose to a record 11.7 percent in October, the highest since the data series started in 1995. Eurostat, the EU’s statistics office, will publish November data on Jan. 8.

“Compared with other countries, the German job market is solid,” said Alexander Koch, an economist at UniCredit Research in Munich. “We have seen some months with rising unemployment, but I think the numbers will turn for the better again soon.”

To contact the reporter on this story: Stefan Riecher in Frankfurt at sriecher@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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