German unemployment falls to record low in September

Unemployment in Germany fell to its lowest level in more than 20 years in September as the labour market shrugged off fears of a pending economic slowdown, official data showed Thursday. The German jobless rate, which measures the proportion of people registered as unemployed against the working population as a whole, fell to 6.6 percent in September from 7.0 percent, according to raw or unadjusted figures published by the Federal Labour Agency in Nuremberg. That was the lowest level since German unification and a much steeper fall than analysts had been expecting. In concrete terms, the total number of people out of work was down by 149,000 from August to September, and down by 231,000 year-on-year to stand at 2.79 million, the agency said in a statement. It is the first time since 1992 that the jobless total has been below 2.8 million. Unemployment tends to fall in September as a result of seasonal factors, such as the end of the summer holidays. To iron out such fluctuations, the Bundesbank calculates seasonally adjusted data, and these showed the jobless total down by 26,000 over the month and the adjusted jobless rate slipping to 6.9 percent from 7.0 percent. "The situation on the labour market continued to improve in September. Demand for labour remains high," said labour agency chief Frank Weise. In Berlin, Economy Minister Philipp Roesler said the better-than-expected data "suggest that the economy will continue to fare well in the third quarter as well." "In face of the uncertainty on the financial markets, the labour markets are having a stabilising effect on the economy as whole," Roesler said. Unemployment is regarded as a lagging indicator, because companies usually need time to adjust their workforce to upturns or downturns in the economy. Nevertheless, despite leading indicators pointing to a imminent slowdown in the wake of the eurozone debt crisis, the German labour market is proving resilient, said Christian Schulz, senior economist at Berenberg Bank. "The German jobs miracle is continuing," Schulz said. "Employment is continuing to rise faster than unemployment is falling. Better still, core employment -- workers earning enough to be subject to social security contributions -- rose in July," the analyst said. "And the fact that temporary workers are still high in demand proves that the labour market sees no cyclical downswing yet. Otherwise, temporary workers would be the first to be hit," Schulz said. Timo Klein, senior economist at IHS Global Insight, also believed "cyclical factors have thus not impacted the labour market much as yet, although it is likely that evidence of that will become apparent during the coming months." The recent declines seen in the monthly jobless totals "cannot be sustained in the foreseeable future," Klein cautioned, nevertheless predicting that unemployment will continue to come down "or at worst move sideways during the remainder of 2011 and in 2012." The main risks would come from the fallout of the eurozone debt crisis, related banking sector concerns, and the slowing US economy, Klein warned. "Nonetheless, overall, Germany's economic recovery appears to have enough underlying domestic stamina to prevent a recession," he said. Natixis economist Christian Ott said that the positive labour market outlook will benefit consumer demand "in the second half of the year and partly balance" any weakness in external trade resulting from the eurozone crisis.