German unemployment drops for 15th month
German unemployment declined for a 15th month in September as car makers and other manufacturers boosted hiring to meet export-led demand.
The number of people out of work declined a seasonally adjusted 40,000 to 3.15 million, the Nuremberg-based Federal Labour Agency said today.
Economists forecast a decrease of 20,000, according to the median of 30 estimates in a Bloomberg News survey. The jobless rate dropped to 7.5pc, the lowest since April 1992.
Companies such as Daimler and Volkswagen are adding jobs as they harness faster economic growth in countries such as China and Brazil.
Business confidence in Europe’s largest economy unexpectedly rose to the highest level in more than three years this month amid signs buoyant exports and falling joblessness are beginning to feed through to consumer spending.
For now, “this improvement is industry-driven,” Alexander Krueger, head of capital market analysis at Bankhaus Lampe KG in Dusseldorf, said in an interview.
Even as global demands weakens “German consumption will carry the economy along, so the general growth picture will continue.” That means “we’ll continue to see better numbers in the coming months until unemployment drops below 3 million.”
German economic growth has shown signs of slowing after gross domestic product jumped a record 2.2pc in the second quarter, the fastest since records for a reunified Germany began in 1991.
Factory orders unexpectedly declined in July and manufacturing expansion eased for a second month in September.
Still, the Bundesbank last week said the recovery “remains intact” as companies including truck maker MAN SE raise profit forecasts and falling unemployment helps domestic consumption.
Consumer spending increased 0.6pc in the second quarter, its first gain in a year. Household spending will “continue to pick up” due to the improving labour market and the “quite optimistic mood of consumers,” the Bundesbank said September 20.
The German Retail Federation raised its outlook for 2010 retail sales on September 23, projecting growth of 1.5pc after previously forecasting flat sales.
Strengthening consumer demand may offset some of the impact of fiscal tightening as Chancellor Angela Merkel’s government pushes through spending cuts and revenue-raising measures to shrink the budget gap.
For now, exports are driving growth. Bayerische Motoren Werke, the world’s largest maker of luxury cars, said September 16 it plans to add models and start a vehicle-leasing business in China.
Car exports to China tripled in the first half of the year to 128,000, the Federal Statistics Office said last week, exceeding the 122,000 cars shipped to China in 2009.
“In comparison with European competition, Germany’s automobile and chemical industries are profiting very significantly from China’s surge,” Deutsche Bank analysts led by Reto Schemm-Gregory wrote in a note to clients yesterday.
Munich-based Siemens, which this week predicted an increase in fiscal fourth-quarter profit to “very satisfactory” levels, reached an “open-ended” agreement with union workers that will secure the jobs of its 128,000 German employees indefinitely, avoiding compulsory layoffs “wherever possible.”
As exports fuel the recovery and companies’ profits, workers are seeking higher wages. The IG Metall union said today it secured a 3.6pc wage increase for 85,000 steel workers at companies such as ThyssenKrupp and Salzgitter.
Germany staved off mass unemployment during the financial crisis with a state-sponsored program that assisted companies in keeping workers on their roles working shorter hours.
The Labour Agency has said the “Kurzarbeit” programs have given way as staff return to full-time employment.