(c) Reuters. FILE PHOTO : The sun sets in the background of Frankfurt’s skyline on August 13, 2023. REUTERS/Kai Pfaffenbach
By Maria Martinez
BERLIN (Reuters) – German unemployment rose more than expected in August, showing the first cracks in what had been until now a very resilient labour market.
The Federal Labour Office said on Thursday that the number of people out of work increased by 18,000 in seasonally adjusted terms to 2.63 million. Analysts polled at Reuters expected this figure to increase by 10,000.
The seasonal adjusted unemployment rate remained steady at 5.7%.
“The summer break and the economic weakness is leaving their mark on labour market”, said Andrea Nahles, head of the Labour Office. Andrea Nahles, head of the labour office, said that the market is still in good shape. Although the Federal Labour Office has seen a slowdown in labour demand in the last year, it remains at a high level.
Germany’s labour market has been very strong but is now losing steam as activity weakens. The German economy, Europe’s biggest, stagnated in second quarter. It showed no signs of recovery after a winter slump and cemented its position as the weakest major economy. Holger Schmieding, a Berenberg economist from 1998, coined the term “the sickman of Europe” to describe Germany’s current economic state. He does not believe that the label is applicable today because the labor market has changed. Schmieding stated that “Germany has record employment, whereas in the 1990s employment was declining and unemployment was increasing.” According to data released by the Federal Labour Office (FLO), the number of people employed in July increased by 15,000 over the previous month. It was 339,900 higher at 45.92 millions than the previous year. The reporting of employment data is a month behind unemployment data.
Today, the main economic problem is labour shortages. Schmieding stated that “Germany is the victim of its success”. “Germany’s labour shortage is worse because the country has been so successful in utilizing its human resources.”