German Joblessness Falls for Third Month, Retail Sales Rise

(Bloomberg) -- German unemployment declined for a third month as Europe’s largest economy experiences a gradual recovery from the pandemic shock.

A drop of 8,000 in September left the total number of jobless people at 2.91 million, the Federal Labor Agency said Wednesday.

The jobs market is currently being propped up by government subsidies, with close to 4 million workers on furlough programs, according to estimates by the Ifo Institute. That’s helping domestic demand, with figures showing retail sales rose in August and were 5.8% above their pre-crisis level in February.

German manufacturing has undergone a significant rebound in recent months, and production expectations suggest companies expect demand to strengthen. Yet activity in the services sector is shrinking again as resurgent virus infections trigger new restrictions.

The Bundesbank expects the overall economic recovery to progress at a slower pace during the rest of the year, and has argued in favor of continued fiscal support. The government recently extended its enhanced furlough program through the end of 2021, with other countries in Europe taking similar steps.

Germany’s unemployment rate eased to 6.3% in September.

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