– Adds Comments From Labor Agency Head

– SA Unemployment: +9k (pan-German), +7k (West), +2k (East)

FRANKFURT (MNI) – German unemployment rose slightly more than
generally expected in August but not enough to lift the jobless rate
from July’s 21-year low of 6.8%, the Federal Labour Office reported on
Thursday.

The number of unemployed rose by 9,000 in August to 2.901 million
from an upwardly revised 2.892 million in July. Most analysts had
expected a monthly increase of at most 8,000.

In unadjusted terms, unemployment climbed 29,000 to 2.905 million
but the jobless rate was unchanged at 6.8%.

Job vacancies fell by 4,000, adding to July’s 7,000 decline and
suggesting that demand may be peaking. Payroll jobs data, which lag by
one month, rose by 16,000 in July after +25,000 in June.

Speaking to journalists, the Labor Agency’s Frank-Juergen Weise
acknowledged the unemployment numbers showed that the positive
developments in the first half of the year were weakening, but he denied
that a full trend reversal in labor market was looming.

“If we add everything together, then we should expect sideways
movement,” Weise said. “There will not be improvement to the degree that
we saw in the first half of the year.”

Weise said the Labor Agency had expected unemployment of between
2.8-2.9 million through this year and noted that August’s figures put
the total jobless number in line with that estimate.

Employment as measured in International Labour Office terms stood
at 41.620 million in July, according to data released earlier today.

With the jobless level up for the fifth time in six months, labour
market trends reflect the slowdown in economic growth and employers’
growing uncertainty about future prospects.

As the economic environment continues to deteriorate, car maker
Opel earlier this week announced that it would cut working hours of
thousands of workers in response to sluggish demand. The move recalls
the widespread use of public subsidies for short-time work during the
2008-09 crisis to avoid job losses under the government’s Kurzarbeit
program.

While the program was very successful and allowed companies to
respond more quickly when demand recovered, Opel’s move is unlikely to
be followed widely, as a sharp increase in unemployment in the months
ahead remains unlikely.

August’s flash PMI for Germany, released on August 23, showed a
fifth successive monthly fall in manufacturing employment, while service
providers added to staff, giving a marginal overall expansion of the
private sector workforce.

The European Commission sentiment index, released on July 30,
showed employment expectations easing across all sectors apart from
retail trade. However, the index levels remained well above the
historical averages throughout the economy.

Many German employers are now in wait-and-see mode, neither hiring
nor downsizing until Europe’s economic locomotive begins to pick up
steam again, an MNI survey of recruitment professionals indicated.

Survey participants cited a combination of peaking demand for new
workers and supply-side shortages that have slowed the pace of hiring,
as many regions are nearing full employment and scraping the bottom of
the barrel for quality applicants.

The research arm of the German labor agency IAB in late March
forecast 2012 unemployment to average at 2.84 million, 130,000 fewer
than in 2011, assuming GDP growth of 1.1%. IAB was not in the position
to offer insight into how recent weak data may affect its new forecasts
due to be released in September.

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

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