We could be seeing early signs of the German labour market softening
The major spike in joblessness in May owes more to reclassification but at the same time the FEA did raise concerns at the time of the economic slowdown starting to spill over to the labour market - as highlighted in the report here.
Fast forward to August, we're now seeing that unemployment total has yet to show a monthly decline for four straight months now. For some comparison, that has never been the case as a drop in unemployment total happens almost every month for the past five years.
If anything else, this points to the manufacturing recession in Germany starting to take a toll on the country's labour market and that's never a good sign.
Although the unemployment rate is seen holding near record lows at 5.0%, it hasn't exactly helped to spur solid inflationary pressures in the German economy.
As such, if labour market conditions start unfolding and softening in the months/quarters ahead, it is going to add more headache for Germany and the ECB as such a scenario would bode ill for the inflation outlook in general.
Fiscal stimulus can't come soon enough for Germany.
