German Unemployment Falls Less Than Forecast as Economy Dithers

(Bloomberg) -- German unemployment fell less than forecast at the start of the year, a possible sign of weakness in what’s been a bright spot for the economy.

Joblessness declined by a seasonally adjusted 2,000 in January to 2.26 million. Economists had predicted a drop of 10,000. The report follows a spate of indicators suggesting companies are increasingly nervous about trade uncertainties and waning growth in China. The jobless rate held at 5 percent.

Key Insights

• Unemployment only declined in east Germany, while the number of jobless people remained unchanged in the western part of the country.
• January is traditionally a weak month for the labor market, labor-agency head Detlef Scheele said in a statement. At the same time a continued increase in employment and still-high demand for workers points to a good start to the year.
• Domestic demand will support economic growth after Europe’s growth engine stuttered in the second half of 2018 and global trade uncertainty prompted the government to slash its 2019 outlook.

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• Railway operator Deutsche Bahn AG and airline Deutsche Lufthansa AG are hiring 22,000 and 5,000 employees respectively this year, offsetting job cuts in the car and retail industries.
• In the euro area, employment plans have worsened markedly in industry, and, to a lesser extent, in services. Risks to the economic outlook moved to the downside, European Central Bank President Mario Draghi said last week.

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