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.

Get More

• 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.

--With assistance from Kristian Siedenburg, Harumi Ichikura and Piotr Skolimowski.

To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Jana Randow

©2019 Bloomberg L.P.