German Employment Grows While Unemployment Falls

One of the great enigmas about the current economic slowdown in Germany is the way unemployment continues to fall and employment continues to rise, even as retails sales drop, and exports weaken. German unemployment fell again in September as machine makers hired people to work off an order backlog. The number of workers without jobs, adjusted for seasonal variations, dropped by 29,000 to 3.18 million after falling 40,000 in August, according to data from the Federal Labor Agency out today.



According to the latest comparable data of ILO equivalent measures published by the Organization of Economic Cooperation and Development, Germany's jobless rate was 7.3 percent in July. France, Germany's main trading partner, reported 7.3 percent unemployment compared with 4 percent in Japan and 5.7 percent in the U.S. The OECD average was 5.8 percent.

In a separate report the Federal Statistical Office, using a slightly different methodology (the monthly labour survey) announced that in August 2008 the number of persons in employment was 40.27 million. That was an increase by 558,000 persons (+1.4%) on August last year.




In August 2008, the number of persons in employment in Germany amounted to 40.30 million after elimination of the typical seasonal variations. That was a seasonally adjusted increase by 42,000 persons (+0.1%) on July 2008.

Based on the labour force survey, and according to the definitions of the International Labour Organization (ILO) the seasonally adjusted unemployment rate – which is harmonised across the EU and measured as the share of unemployed in the total labour force – amounted to 7.2% in Germany and was thus considerably below the level of August 2007 (8.3%).

German Consumer Confidence Rises In September, But Remains At A Very Low Level

German consumer confidence rose in September for the first time in five months after falling fuel prices left consumers with more to spend on items like food and clothing. The GfK forward looking consumer climate index for October increased to 1.8 from a revised 1.6. As can be seen in the chart, last months reading was very low, in fact it was the lowest level in five years.



The price of oil has fallen by almost a third from its record in July. Still, at more than $100 a barrel the cost remains 30 percent higher than a year ago and erodes spending power. At the same time, a deepening crisis on global financial markets may dim consumers' willingness to spend in coming months.

As for the sub components, after two months of marked losses, the economic outlook component was a little more positive in September. The indicator was up 6 points to -15.7. However, the value still remains around 56 points below that recorded in September 2007.

Income expectations were up for the second consecutive month, and the indicator was up by 2.7 points in September. It still remains at a very low level however, as documented by the value of 16.4 points below that September 2007.

The consumer propensity to buy was up quite. The indicator climbed by 15.1 points to reach -12.8 points. The propensity to consume, however, remained moderate, since it is still more than 10 points behind that recorded in the same period in the prior year.

German Business Confidence Falls Again In September

German business confidence declined more than expected to the lowest level since May 2005 in September as the worsening financial crisis in the U.S. damped the outlook for global economic growth. The Munich-based Ifo institute's business climate index, based on a survey of 7,000 executives, fell to 92.9 from 94.8 in August.