–Adds Comment from IAB head Frank-Juergen Weise In Fourth Graph

–SA Unemployment: -45k (pan), -34k (west), -11k (east)

MNI survey median: -20,000 m/m
MNI survey range: -48,000 to -5,000 m/m

FRANKFURT (MNI) – The German labour market has once again proved to
be more robust than generally expected, as 45,000 additional individuals
left the ranks of the unemployed in May, leaving the total number at
3.246 million and reducing the jobless rate to 7.7%, the Federal Labour
Agency reported on Tuesday.

Without adjusting for seasonality, number of unemployed came to
3.242 million, down from April’s 3.406 million, leaving the jobless rate
at 7.7% compared to 8.1% previously.

Lagging unemployment figures by one month, the number of payroll
jobs expanded by 38,000, adding to March’s +14,000, while job vacancies
in May rose by 5,000 following April’s 10,000 gain.

At a press conference following the jobless report, IAB head
Frank-Juergen Weise estimated that average unemployment this year could
be somewhat less than the federal government’s forecast of 3.44 million.
Conditions on the labour market are “better than feared, but uncertain,”
he said. And they will remain uncertain for “at least the rest of the
year.”

While the labour market remains resilient, rising labour costs will
likely lead firms to cut staff sometime in the near future, the
Organisation for Economic Co-operation and Development (OECD) warned
last week.

In its most recent Economic Outlook report, the OECD forecast
unemployment to average 7.6% this year and climb to 8.0% in 2011, its
highest level since 2007.

“However, even after taking some upcoming deterioration of the
labour market into account, the performance of the labour market during
the crisis remains exceptional in comparison with past recessions,” the
OECD said.

The Bundesbank appears somewhat less than worried about the
country’s labour market, saying in its Monthly Report that unemployment
fears do not appear to play a significant role currently and that
households’ propensity to buy remains on a “comparatively elevated
level”.

“This is a good pre-condition for private consumption to continue
to flank the export-lead recovery,” the central bank said.

Confirming the Bundesbank’s optimism, the private sector reported
further job creation in May due to accumulating work backlogs and
stronger new business growth, Markit Economics’ purchasing managers
index (PMI) showed.

“The overall picture remains that of an ongoing recovery in German
private sector business activity, driven by a strong rebound in
manufacturing,” Markit economist Tim Moore said. “This positive
underlying trend continues to trickle through to the labour market, with
private sector job creation the strongest for 22 months in May.”

The International Monetary Fund, however, is not as optimistic,
forecasting the jobless rate to hit 8.6% in 2010 and break above 9% next
year.

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

[TOPICS: M$G$$$,MAGDS$,M$X$$$,M$XDS$,MT$$$$]