Germany’s Labour Office released data on Thursday showing that the unemployment rate rose more than expected in October, Reuters reports.
Analysts had expected an increase of 15,000. However, the Federal Labour Office reported that the number of unemployed rose by a seasonally adjusted 30,000 to 2.678 million. Andrea Nahles, chairwoman of the Federal Employment Agency, noting that this was taking its toll on the labour market, said:
For a good year now, the German economy has more or less been treading water.
In September, the seasonally adjusted unemployment rate rose to 5.8% from 5.7%.The Federal Labour Office reported 749,000 job openings in October, 98,000 fewer than a year ago.
The German Manufacturing Purchasing Managers’ Index (PMI) released on Thursday showed a significant and accelerated contraction in factory labour force in October. Cyrus de la Rubia, Hamburg Commercial Bank (HCOB) chief economist, said:
Yet, when comparing to previous recessions, the current job scenario seems relatively favourable given the overall situation in the manufacturing sector.
He believes this is due to a structural labour shortage in the German economy, which means most companies are struggling to keep existing staff on board. Tomas Dvorak, senior economist at Oxford Economics, told Reuters:
Labour hoarding was the main reason why employment was so resilient even when the economy was struggling.
However, he argues that labour hoarding can only work in a short-term economic downturn, and now that companies realise that the economic downturn will continue, they will have to lay workers off. He added:
It might not be a severe slowdown, but it’s going to be a slow burner.
