SA Unemployment: -17k (pan-German), -5k (West), -12k (East)

MNI survey median: -20,000 m/m
MNI survey range: -35,000 to -10,000 m/m
—

FRANKFURT (MNI) – The ranks of the unemployed in Germany contracted
yet again in August, though by slightly less than generally expected, as
17,000 fewer individuals than in July were actively searching for jobs,
the German Labor Ministry reported Tuesday.

As a result, the number of jobless people in Germany fell to 3.193
million, leaving the seasonally adjusted unemployment rate at 7.6%, in
line with expectations.

The median forecast in a survey of analysts conducted by Market
News International had put the drop in unemployment at 20,000.

Without adjusting for seasonal trends, the jobless rate remained
stable at July’s 7.6%, as the number of unemployed declined to 3.188
million this month from 3.192 million in July.

Payroll jobs, which lag jobless figures by one month, increased by
an additional 13,000 in July after rising 26,000 in June, while job
vacancies rose by 4,000 in August after rising 13,000 in July. The pace
of labor market recovery thus appeared to have slowed over the summer.

Nevertheless, leading indicators suggest further improvement in the
job market in the months ahead. The Ifo Employment Barometer for German
industry and trade rose sharply in July. “The labour market in Germany
is expected to develop positively in the near future,” the research
institute said.

The European Commission’s business and consumer survey for August
showed employment expectations over the next three months recovering
slightly further in the manufacturing sector (-1 to +1) and surging in
services (+5 to +12). In construction, employment expectations stagnated
while in retailing expectations declined slightly. But expectations in
both sectors remained firmly above their long-term average.

Earlier this summer, the German Chamber of Commerce and Industry
(DIHK) forecasted a net 100,000 more people would find employment over
the final six months of the year, taking the average unemployment figure
for 2010 to 3.2 million. “This means the number of jobless would have
fallen to its lowest level since 1992,” DIHK President Hans Heinrich
Driftmann said.

In its latest Monthly Report, the Bundesbank also saw encouraging
signs of further recovery. The central bank noted that the use of
subsidized short-term labor had fallen to around 481,000 workers in May
from an average of 809,000 in the first quarter.

“This trend should have continued, especially since the number of
new applications continued to decline gradually over recent months,” the
report said. New applications in July totaled 27,000, only slightly
above pre-crisis levels, it added. As full utilization of the current
work force slowly returns, companies will eventually have to hire new
employees.

Employment expectations have no doubt benefitted from the record
2.2% q/q GDP rise in the second quarter. Uncertainty about the strength
of the recovery going forward may yet dampen expectations as well as the
actual recovery ahead, especially since total output remains well below
the pre-crisis level.

Nevertheless, while there may be risks of a slower pickup in
employment ahead, there are currently no signs that the recovery will
end in the months ahead.

Earlier today, the Federal Statistical Office announced that total
employment level rose for the sixth consecutive month to 40.395 million
in July, reflecting a gain of 9,000 jobs from June.

— Frankfurt bureau: +49 69 720 142, email: frankfurt@marketnews.com

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