Unemployment in the Eurozone’s largest economy increased more than four times economists had predicted in May as the Euro crisis and a longer than usual winter took its toll on Germany’s economy.
The number of people made jobless in the month rose to 21,000, a fourth consecutive increase and far more than economist predictions of an increase of 5,000. Despite the surprise rise this May the German government declared that its labour market remains in good shape.
Carsten Brzeski of ING said; “Despite the stable unemployment rate, it remains noteworthy that the non-seasonally adjusted drop was the weakest May performance since 2005. To some, this is a clear warning that the debt crisis is finally taking its toll on the German labour market.
‘In our view, however, the weak spring revival of the labour market can also be explained by the relatively high number of public holidays in May and the still cold weather. Therefore, it is far too premature to start singing Swan Songs on the labour market.”
Brzeski argues that the German labour market remains “the showcase example” for successful labour market reforms.
“Even the current success has also received a helping hand from strong export growth and the first wave of ageing; the reforms of the mid-2000’s are still paying off. Up to the early 2000’s, the German economy required growth of at least 1.5% to create new jobs.
‘In recent years, GDP growth rates of less than 1% were sufficient for job creation. This bodes well for the near-term outlook, indicating that despite an expected GDP growth rate of only roughly 0.5% this year, the labour market should remain stable. At the Eurozone level, it is obvious that the success of its own structural reforms will further encourage the German government to continue hammering on structural reforms.”
After the data Germany’s adjusted jobless rate held at 6.9%, just above the twenty year low of 6.8%.
The Euro has edged upwards against a number of its most traded peers in early trading and could find support later on Wednesday if Germanys latest Consumer Price Index comes in better-than-forecast.
Current Euro (EUR) Exchange Rates
The Euro/US Dollar Exchange Rate is currently in the region of: 1.2886
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8554
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.3458
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.5962
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7764
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1689
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7430
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6265
(Correct as of 10:15am GMT)