The number of people out of work dropped a seasonally adjusted 8,000 to 2.97 million, the Nuremberg-based Federal Labor Agency said today. Economists forecast a drop of 30,000, according to the median forecast of 30 estimates in a Bloomberg News survey. The jobless rate declined to 7 percent, the lowest since records for a reunified Germany began in 1991.
Declining unemployment in Europe’s biggest economy underscores German resilience in the face of a clampdown on budget deficits by euro-area governments buffeted by the debt crisis and rising fuel prices that crimp household spending. Retail sales edged up in April after declining in March, the Federal Statistics Office said today.
“The labour market party continues,” said Carsten Brzeski, an economist at ING Group in Brussels. “Even if the strong dynamics of new vacancies and employment expectations is currently slowing down somewhat, unemployment is bound to drop further.”
The euro was up 0.95 percent to $1.4413 as of 10:30 a.m. in Berlin.
Germany and neighboring France are driving euro-area growth even as countries such as Greece, that were forced to call for international bailouts, grapple with their debt burden.
BMW, Mini
The German economy may grow more than 3 percent for a second year in 2011 as it sustains a “robust” recovery, the International Monetary Fund said on May 17. German business confidence unexpectedly held steady this past month on the back of company investment and a rebound in construction. Economists had forecast a decline.
German carmakers are hiring because of booming demand in China for high-end vehicles. Bayerische Motoren Werke AG Chief Executive Officer Norbert Reithofer said on May 12 the Munich- based company will hire about 2,000 workers over the course of the year, more than half of them in Germany, “in light of strong global demand for BMW, Mini and Rolls-Royce brand vehicles.”
Siemens AG, Europe’s largest engineering company, said May 4 that profit will rise at least 75 percent this year as customers buy more industrial equipment.
Even so, signs are emerging that Germany’s labor market may be losing steam, said Timo Klein, an economist at Global Insight Inc. in Frankfurt.
‘A Cooling’
“It’s definitely looking better now than it was a half year ago,” Klein said in an interview. “But if you look at the current figures, in terms of economic activity, the indications are that we’re already seeing a bit of a cooling.”
The pace of Germany’s economic growth will probably slow by mid-year after jumping 1.5 percent in the first quarter, the Finance Ministry said May 20.
German output “was clearly lifted during the reporting period by backloading and catching-up effects,” the Frankfurt- based Bundesbank said the same day.
With retail sales increasing 0.6 percent in April from March, when they fell 2.7 percent, “the German consumer is hesitantly driving growth and picking up the economic relay baton from trade and investment,” said Christian Schulz, an economist at Joh. Berenberg Gossler & Co. in London.
OECD Comparisons
According to comparable data from the Organization for Economic Cooperation and Development, Germany’s jobless rate was 6.3 percent in March while the average for the 17 euro nations was 9.9 percent. France, the second-largest euro-area economy, had 9.5 percent unemployment, the U.S. 8.8 percent and Spain 20.7 percent.
Even so, joblessness at a 19-year low and buoyant economic growth has yet to translate into support for Chancellor Angela Merkel, whose Christian Democratic bloc dropped to match its year low of 30 percent in a Forsa poll for Stern magazine today.
Merkel’s coalition with the Free Democrats had 34 percent support compared with 50 percent for the opposition Social Democratic Party and Greens, who engineered a phase-out of nuclear power that Merkel emulated yesterday, the poll showed. Forsa polled 2,501 voters on May 23-27. The margin of error was as much as 2.5 percentage points.
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