FT.com / World - German unemployment falls sharply

FT.com / World - German unemployment falls sharply

German unemployment falls sharply
By Bertrand Benoit in Berlin

Published: January 31 2008 11:06 | Last updated: January 31 2008 11:06

The German economy continued to create jobs at a brisk rate in January, according to fresh statistics released by the Federal Labour Agency on Thursday showing a seasonally adjust fall of 89,000 in the number of jobseekers.

The drop was more than twice as large as economists had anticipated. According to internationally comparable figures, which were only available for December, the unemployment rate in Germany stood at 8.1 per cent last month, with a total of 3.52m jobseekers.

Separate figures from the Federal Statistical Office, which also lag a month behind the national unemployment data, showed 30,000 new jobs had been created last month.

The Labour Agency said the healthy figures might have been flattered by the relatively mild weather and a change in benefits for the short-term unemployed, which could lead to an upwards correction in unemployment figures in the coming months.

“This is nonetheless a strong report as indicated by the continuing strong growth in employment,” said Dirk Schumacher, economist at Goldman Sachs. “From December 2007 to 2008, more than half a million jobs were created.”

While they underline the resilience of Europe’s largest economy in the face of a more challenging environment at the end of last year, the unemployment statistics are backward-looking in nature as hiring and firing decisions by companies lag behind developments in the business cycle.

The absence of a rebound in domestic consumption – as evidenced by weak retail sales figures also released on Thursday – despite the robust health of the labour market has left economists perplex and may reflect widespread concern among consumers about the relatively high rate of inflation.
Copyright The Financial Times Limited 2008