German Unemployment Falls Again as Economy Shows Resilience
German unemployment unexpectedly fell for a second month, highlighting the resilience of the labor market to a manufacturing slump and new threats from the coronavirus outbreak.
Evidence that Europe’s largest economy continues to create jobs follows a report showing sentiment among German business hasn’t yet been shaken by the epidemic. That raises prospects that the recovery expected for the beginning of 2020 could still be salvaged after the economy ground to a halt at the end of last year.
The number of people out of work dropped by 10,000 in February to 2.26 million, defying economist predictions for a 4,500 increase. The jobless rate held at 5%, near a record low.
The labor market has remained a bright spot for the German economy even as its exporters wrestled with trade tensions and now face supply-chain disruptions caused by the virus. The epidemic has shuttered plants across China and also hit the industrial heartland of Italy, where the number of people infected has risen above 600.
The economy entered 2020 already weakened. Companies cut investment spending at the end of last year as exports declined and household consumption stagnated. The Bundesbank has painted a dire picture of the country’s outlook, and President Jens Weidmann will offer an update later on Friday.
Some support could be on the way as Finance Minister Olaf Scholz tries to temporarily suspend the constitutional mechanism that restricts the country’s debt levels, a move that could open an avenue for limited additional fiscal stimulus.
Extra spending could add to more than 160 billion euros ($176 billion) already allocated through 2023 in areas such as infrastructure and transportation to keep the economy competitive.
©2020 Bloomberg L.P.