German unemployment hits new low, despite refugee influx

Feb 02, 2016 12:00 AM

German unemployment fell to a new historic low in January, despite a massive influx of refugees, as the recovery in Europe's biggest economy remains on track, data showed on Tuesday.

The unemployment rate -- which measures the jobless total against the working population as a whole -- eased to 6.2 percent in January from 6.3 percent in December.

In numerical terms, the number of people registered as unemployed in Germany declined by a seasonally-adjusted 20,000 to 2.732 million, the Federal Labour Office said in a statement.

That was more than expected, as analysts had been pencilling in a decline of around 6,500.

With the new drop, unemployment now stands at the lowest level since West and East Germany reunited in 1990 after the fall of the Berlin Wall the previous year.

By contrast, in raw, or unadjusted, terms, the jobless total increased by 239,000 to 2.92 million and the unemployment rate jumped to 6.7 percent in January from 6.1 percent in December, the office noted.

But that increase was solely due to seasonal factors, it explained.

Unemployment tends to rise during the cold winter months and after the Christmas holidays.

"The German economy expanded by 1.7 percent all in all in 2015. That was primarily due to dynamic domestic consumption," the labour office said.

"The trend is set to continue in 2016. The labour market is developing positively," it added.

Excellent shape

Analysts were cheered by the data, especially as some observers had predicted that the arrival of nearly 1.1 millionsylum seekers in Germany in 2015 would push the jobless numbers higher.

"The numbers show what excellent shape the German labour market is in," said BayernLB economist Johannes Mayr.

"The slowdown in the decline in unemployment we had been expecting has not materialised," the expert said.

"Neither the minimum wage, nor the upward pressure on the numbers via increased migration have materialised," Mayr said.

IHS Global Insight analyst Timo Klein agreed.

"Overall, labour market conditions remain healthier in Germany than in most other countries in Europe," he said.

Separate statistics for the entire euro area showed unemployment at its lowest level in more than four years in December, the highest jobless rates seen in Greece and Spain (24.5 percent and 20.8 percent respectively). And in France, the area's second-biggest economy, unemployment stood at 10.2 percent.

Klein suggested that the influx of refugees would take until the middle of the year before starting to be reflected in the German unemployment numbers in view of "the administrative lags involved as authorities are currently being overwhelmed by the numbers."

This year, German economic growth is expected to exceed the current rate of potential growth of just below 1.5 percent, the analyst said.

"Taking the ramifications of refugee developments into account, we now expect unemployment in annual average terms to decline from 6.7 percent in 2014 and 6.4 percent in 2015 to 6.2 percent in 2016 before rebounding modestly to around 6.5 percent in 2017-18," Klein concluded.

 

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