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German jobless rates soaring
By Rainer Buergin |
January 8, 2009, Thursday
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Print Edition
Print Edition
GERMAN unemployment rose for the first time in almost three years in December as the labor market caught up with an economy that shrank during most of 2008.
The number of people out of work, adjusted for seasonal swings, rose 18,000 last month, the Nuremberg-based Federal Labor Agency said yesterday. Economists expected an increase of 10,000, according to the median of 30 estimates in a Bloomberg News survey. The adjusted unemployment rate rose to 7.6 percent from 7.5 percent.
The increase "is a trend change," Volker Treier, chief economist at the DIHK business association that represents 3.6 million companies, said in an interview. "The only question is how sharp we're going in the other direction."
Companies such as Siemens AG are cutting factory production and jobs as evidence mounts that the global financial crisis is pushing Europe's largest economy deeper into recession. Cooling growth and rising unemployment increase pressure on the European Central Bank to continue cutting interest rates and may harm Chancellor Angela Merkel's chances of securing a second term in September's national election.
Export economy
Germany's export-driven economy is in a so-called technical recession after shrinking in the second and third quarters of 2008.
The economy may have contracted by up to 1.75 percent in the final three months of last year, the Frankfurter Allgemeine Zeitung reported on December 15, citing an Economy Ministry forecast. Business confidence dropped to the lowest in more than a quarter century in December and exports, industrial output and manufacturing orders all declined in October.
Economists are divided over how much unemployment will increase this year. The Kiel-based IfW economic institute, predicting an economic contraction of 2.7 percent, said the number of job seekers will rise by 400,000 on average from 2008. The Berlin-based DIW institute sees an increase of 200,000.
"Up until now, the labor market has been spared from recession," said DIW economist Christian Dreger, who forecasts the economy will shrink around 1 percent this year. "That suggests that most companies assume they're facing only a temporary crisis."
Bad news from the labor market and the broader economy may dominate the campaigns in elections this year that culminate in a federal ballot in September.
Merkel's government has already taken measures to help keep staff on payrolls even amid slumping business.
In its first economic stimulus package, which went into effect on January 1, it extended labor agency aid to workers affected by shortened shifts.
The number of people out of work, adjusted for seasonal swings, rose 18,000 last month, the Nuremberg-based Federal Labor Agency said yesterday. Economists expected an increase of 10,000, according to the median of 30 estimates in a Bloomberg News survey. The adjusted unemployment rate rose to 7.6 percent from 7.5 percent.
The increase "is a trend change," Volker Treier, chief economist at the DIHK business association that represents 3.6 million companies, said in an interview. "The only question is how sharp we're going in the other direction."
Companies such as Siemens AG are cutting factory production and jobs as evidence mounts that the global financial crisis is pushing Europe's largest economy deeper into recession. Cooling growth and rising unemployment increase pressure on the European Central Bank to continue cutting interest rates and may harm Chancellor Angela Merkel's chances of securing a second term in September's national election.
Export economy
Germany's export-driven economy is in a so-called technical recession after shrinking in the second and third quarters of 2008.
The economy may have contracted by up to 1.75 percent in the final three months of last year, the Frankfurter Allgemeine Zeitung reported on December 15, citing an Economy Ministry forecast. Business confidence dropped to the lowest in more than a quarter century in December and exports, industrial output and manufacturing orders all declined in October.
Economists are divided over how much unemployment will increase this year. The Kiel-based IfW economic institute, predicting an economic contraction of 2.7 percent, said the number of job seekers will rise by 400,000 on average from 2008. The Berlin-based DIW institute sees an increase of 200,000.
"Up until now, the labor market has been spared from recession," said DIW economist Christian Dreger, who forecasts the economy will shrink around 1 percent this year. "That suggests that most companies assume they're facing only a temporary crisis."
Bad news from the labor market and the broader economy may dominate the campaigns in elections this year that culminate in a federal ballot in September.
Merkel's government has already taken measures to help keep staff on payrolls even amid slumping business.
In its first economic stimulus package, which went into effect on January 1, it extended labor agency aid to workers affected by shortened shifts.
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