German Unemployment Rises as Manufacturing Slump Starts to Bite
German unemployment rose, demand for new workers dwindled, a sign of weakening economic momentum starting to affect labor market.
(Bloomberg) --
German unemployment rose and demand for new workers dwindled, a sign that weakening economic momentum is starting to affect the labor market.
The number of people out of work increased by 1,000 to 2.283 million in July, marking the third month that joblessness in Europe’s largest economy hasn’t declined. The unemployment rate remained at 5%, close to a record low.
The figures suggest gathering storm clouds for the German economy, which has been relying on lively household spending to prop up growth. Manufacturing is mired in a deep slump exacerbated by international trade disputes and weakening global demand.
German companies are planning fewer new hires, and manufacturers are set to eliminate more jobs than they create. Business expectations fell to their lowest level since 2009 in July, and the Bundesbank says the economy likely shrank in the second quarter.
European Central Bank officials will be keeping a close eye on Germany over the coming weeks as they consider deploying fresh monetary stimulus. Further cuts to already negative interest rates and asset purchases are among the options to boost a lackluster euro-zone economy.
--With assistance from Kristian Siedenburg, Harumi Ichikura and Catarina Saraiva.
To contact the reporter on this story: Kristie Pladson in Frankfurt at kpladson@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow
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