In October, Germany lost 10 000 jobs. This was worse than market expectations for a rise of 10 000, and compares with a rise of 22 000 jobs in September. The latest decline in employment is the first time Germany has lost jobs since early 2010. In addition, the unemployment rate rose to 7% from 6.9% in September. The market was expecting the unemployment rate to remain unchanged at 6.9%.
Fortunately, the overall level of unemployment in Germany remains low by historical standards and also low compared with other countries within the region. But, the increase in unemployment will obviously worsen the economic prospects for the German economy, especially consumer spending. At the same time German exports are also under pressure.
Furthermore, it is also fair to argue that German companies will become increasingly reluctant to hire people while the prospects for the region remain extremely uncertain and weak. The chances of the Euro-area going back into recession are becoming increasingly likely, on almost a daily basis; with the latest ‘referendum’ debacle in Greece making it almost certain that the Euro-area will experience a recession during 2012.
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