Today's German jobs report grabbed attention because of an unexpected increase in the unemployment rate to 5.3% from 5.0%. The number of unemployed rose by 133,000 compared to a decline of 6K expected.
What happened? Are layoffs starting?
No. The German Federal Labor Agency reported that:
“These increases are due to the fact that the Ukrainian refugees are now being recorded in the job centers and are therefore visible in the labor market statistics.”
This dynamic highlights additional jobs slack in the European labor market and could keep the ECB from hiking meaningfully above 0% in the months ahead, especially if economic growth stumbles.