German Unemployment Was Stable Before Restrictions Took Hold
German Unemployment Stable Before Major Restrictions Took Hold
(Bloomberg) -- German unemployment was broadly stable in March, before far-reaching restrictions on business and movement sparked thousands of furloughs in Europe’s largest labor market.
The number of people out of work rose by just 1,000, significantly less than economists predicted. Germany’s federal labor agency said on Tuesday the report was processed based on data available through March 12. With large parts of the economy in lockdown, unemployment is likely to have risen more.
Early estimates have also shown a spike in companies applying for state wage support, which allows businesses to reduce workers’ hours or halt production while still paying them with the help of government salary subsidies. Carmakers Volkswagen AG and Daimler AG and sports-apparel maker Puma SE are among those planning to idle tens of thousands of staff. Even financial institutions like Deutsche Bank AG are considering such moves.
A report containing the latest figures on applications for state wage support is due at 2 p.m. Berlin time.
Germany’s strong labor market was a bright spot for the economy throughout last year, propping up domestic spending when trade tensions weighed down manufacturing. While the overall jobless rate held at 5% in March -- near the lowest level since the country’s reunification -- weaker employment prospects and reduced salaries mean an important pillar of the economy could now crumble.
Economic experts have warned that a recession in Germany is unavoidable. Even if most measures aimed at containing the virus are lifted in mid-May, allowing the economy to recover through the summer, output is expected to shrink by 2.8% this year, according to a report published by government advisers on Monday.
©2020 Bloomberg L.P.