German unemployment rises more than expected in April

BERLIN  -German unemployment rose more than expected in April, Labor Office figures showed on Friday, as a sluggish economy took its toll on the labor market.

The Federal Labor Office said the number of people out of work increased by 24,000 in seasonally adjusted terms to 2.567 million. Analysts polled by Reuters had expected that figure to rise by 10,000.

The seasonally-adjusted jobless rate remained stable at 5.6 percent.

“The spring revival on the labor market remains weak in April,” said Labor Office head Andrea Nahles. “Overall, however, the labor market is in a stable condition.”

Compared to the same month last year, unemployment was up by about 280,000 people, primarily due to the arrival of Ukrainian refugees, Labor Minister Hubertus Heil said, adding: “Nevertheless, we have a stable labor market in a difficult economic environment.”

The unemployment rate will soon tick higher, judging by the rising trend in unemployment claims, according to Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics.

“The increase in April marks a continuation of a rising trend in jobless claims since the beginning of the year, consistent with the sharp slowdown in GDP growth towards the end of last year,” Vistesen said.

In April, there were 773,000 job openings, 79,000 fewer than a year ago. Although the Federal Labor Office has seen a slowdown in labor demand since the summer of 2022, it remains at a high level.

Germany’s labor market is so tight that workers have gained bargaining power in their wage negotiations. German public sector workers agreed a generous wage deal with employers on Saturday, that could set a benchmark for other wage deals taking place this year.

“Although this is good news for consumers, it makes things more difficult for the European Central Bank,” said Carsten Brzeski, chief economist at ING. “Inflation is thus increasingly becoming a demand-driven problem and will remain stubbornly high,” he said.

According to the spring economic projections of the German government, published on Wednesday, employment is expected to continue to grow this year and next, albeit at a somewhat slower pace.

The government expects an unemployment rate of 5.4 percent in 2023 and 5.2 percent in 2024, following 5.3 percent unemployment in 2022.

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