German jobs miracle 'could be running out of steam'

Germany's unemployment rate was steady in November, but the country's much lauded "jobs miracle" could be running out of steam, analysts said Thursday. While Germany's jobless rate -- the proportion of people out of work compared with the working population as a whole -- was unchanged in both unadjusted and seasonally-adjusted terms in November, the actual jobless totals increased, according to data published by the Federal Labour Office. In seasonally adjusted terms -- the yardstick used by analysts and economists -- the jobless total rose by 10,000 to 2.985 million and the jobless rate was unchanged at 6.9 percent. In raw or unadjusted terms -- the numbers preferred by politicians -- the jobless total was up by 4,954 at 2.806 million and the jobless rate was steady at 6.5 percent. Both increases were steeper than analysts had been expecting for this time of year, where unemployment tends to fall. The labour office insisted that the labour market remains "fundamentally sound" as could be seen in the further increase in the number of people in jobs. Economy Minister Philipp Roesler was similarly convinced that "the labour market is in solid shape" and its strength "remains intact." But he cautioned that Germany's successes on the unemployment front cannot be taken for granted. "Overregulation and rigid parameters can become a heavy burden on the economy and therefore also on jobs. I therefore share the concerns of companies and business federations about a possible weakening of the growth momentum," Roesler said. Analysts, who had been expecting a much smaller increase in the dole queues this month, said the robustness that the German labour market has demonstrated throughout the crisis could be beginning to crumble. "The autumn revival of the German labour market turned out to be softer than normal. In fact, the November numbers are the worst November performance of the German labour market since 2004," warned ING DiBa economist Carsten Brzeski. In the immediate term, "the German labour market will remain an important growth driver," Brzeski believed, pointing to record high employment and higher real wages. On Wednesday, consumer sentiment data revealed that German consumers are opening their purses more than at any time in the past seven years. Plans for a new nationwide fixed minimum wage from 2015 "should increase disposable incomes, thereby supporting private consumption. At least in the short run," Brzeski said. However, "the longer run impact on jobs remains unclear. In our view, after the introduction of a minimum wage, it will be hard to squeeze additional positive effects out of the labour market," the expert said. "Today's numbers send a clear warning that the labour market has reached its natural rate of unemployment. To continue the current job market miracle or start a new one, a minimum wage should be flanked by additional measures to create new jobs," he said. Natixis economist Johannes Gareis also felt the new jobless data were "miserably disappointing." However, "leading indicators, such as the Ifo, the PMI and the ZEW indices, paint a rosy picture of the German economic outlook. Against this background, we expect the German labour market to remain in a solid position," Gareis said. IHS economist Timo Klein suggested that the latest rise in the jobless total was largely due to a winding down of job creation schemes. "Unemployment should revert to a modest downward trend by early 2014," Klein said.