German unemployment rises more than expected in October
Employees work at the production site of Mercedes Benz Ludwigsfelde GmbH as German Chancellor Olaf Scholz (not pictured) visits the site, in Ludwigsfelde in the south of Berlin, Germany, April 28, 2023. REUTERS/Christian Mang/File photo
BERLIN -German unemployment rose more than expected in October, Labor Office figures showed on Thursday, showing some cracks in what has been a very resilient labor market.
The Federal Labor Office said the number of people out of work increased by 30,000 in seasonally adjusted terms to 2.678 million. Analysts polled by Reuters had expected the total to rise by 15,000.
“For a good year now, the German economy has more or less been treading water,” said Andrea Nahles, chairwoman of the Federal Employment Agency, noting that this was taking its toll on the labor market.
The seasonally adjusted jobless rate grew to 5.8 percent from 5.7 percent in September.
READ: German business activity slump suggests recession ‘well underway’ -PMI
In October, there were 749,000 job openings, 98,000 fewer than a year ago, the Federal Labor Office said.
Germany’s manufacturing Purchasing Managers Index (PMI) on Thursday showed a solid and accelerated reduction in factory workforce numbers in October.
“Yet, when comparing to previous recessions, the current job scenario seems relatively favorable given the overall situation in the manufacturing sector,” said Cyrus de la Rubia, Hamburg Commercial Bank (HCOB) chief economist.
He said this was the result of the structural labor shortage affecting the German economy, meaning that most companies are holding onto the people they have.
READ: More than half of German companies report labor shortages
“Labor hoarding was the main reason why employment was so resilient even when the economy was struggling,” Tomas Dvorak, senior economist at Oxford Economics, told Reuters.
But he added that labor hoarding only works in a setting where the economic downturn is short-lived, and now that firms are realizing the economic slowdown will last, they will have to lay workers off.
“It might not be a severe slowdown, but it’s going to be a slow burner,” Dvorak said.
