German Unemployment Slides to Record Low as Economy Booms

(Bloomberg) -- German unemployment fell by the most since 2011, pushing joblessness to a record low as Europe’s largest economy powers ahead.

The number of people out of work slid by a seasonally adjusted 30,000 to 2.6 million in March, and the rate dropped to 5.8 percent from 5.9 percent, data from the Federal Labor Agency in Nuremberg showed on Friday. Economists in a Bloomberg survey forecast a 10,000 decline in the number of jobless and no change in the rate.

“It’s not only the jobless number but also the growth in employed that has been strengthening over the last few months,” said Andreas Rees, an economist at UniCredit Bank AG in Frankfurt. “Throughout the course of the year you could see the number of jobless people rise again because of the refugee situation, but it’s difficult to say when that will come. Employment growth is strong enough that it should be able to absorb that effect.”

The number of employed people in Germany, which is reported with a one-month lag, strengthened in February and was about 600,000 higher than a year ago.

The figures echo the Bundesbank’s prediction that the labor-market situation is likely to be even better than stated in recent months due to a “massive” upward correction in employment growth for the second half of last year. That meshes with the strongest levels of business confidence since 2011, signaling that the country’s economic momentum is set to continue even as inflationary pressures show signs of easing.

“The job market continues to develop favorably,” Detlef Scheele, board member of the labor agency, said in a statement. “With the onset of spring activity, the number of unemployed people has declined, employment growth is continuing unabatedly, and demand for new employees continues to be high.”

Joblessness fell by about 18,000 in western Germany and by 12,000 in the eastern part of the country, the labor agency said.

Data published Thursday showed that the nation’s consumer-price growth eased to 1.5 percent in March, the first slowdown since August 2016. Inflationary pressure is cooling as energy costs fade.

Euro-area inflation also slowed to 1.5 percent this month, from 2 percent in February, data on Friday showed. The European Central Bank, which is facing pressure in countries such as Germany to rein in its stimulus, has predicted that the region’s price growth would peak in the first quarter.

--With assistance from Andre Tartar and Kristian Siedenburg

To contact the reporters on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net, Stuart Metzler in Frankfurt at smetzler4@bloomberg.net.

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Zoe Schneeweiss