German unemployment increased in June as firms shed jobs amid the growing uncertainty surrounding the Eurozone debt crisis and the rising threat of contagion to bigger economies.
Data from the Federal Labor Agency revealed that unemployment rose by 7,000 in June from a month earlier compared to expectations for an increase of a more modest 3,000. In May, the number of unemployed persons increased by 1,000.
The unemployment rate remained unchanged at 6.8 percent. The rate for May was revised to 6.8 percent from the previously projected 6.7 percent. The rate has been steady at this level for the seventh consecutive month, according to revised figures.
Registered employment declined by 4,000 in June after falling by 5,000 in May.
Most forward-looking indicators point to a weakening of the German labour market in the coming months, said Carsten Brzeski, a senior economist at ING Bank NV. Employment expectations in the manufacturing industry are already negative and the number of vacancies is also dropping, he added.
"Signs are increasing that the resilience of the German labour market is slowly cracking up. The German labour market is losing momentum," Brzeski noted. "This might not be a cause for concern for the German economy, yet, but definitely for the rest of the Eurozone."
The Ifo Institute, in a twice-yearly report published Thursday, said the increased uncertainty in Eurozone continued to dampen German economic momentum.
Nonetheless, the think thank upped its forecast for 2012 economic growth 0.7 percent 0.4 percent expansion projected in December. In 2013, the gross domestic product is expected to grow 1.3 percent, buoyed by strong domestic demand.
Ifo said the unemployment rate may fall to 6.6 percent in 2013 from 6.7 percent this year.
Despite the negative figures released today, the German labor market remained strong. With prospects for further improvement in the employment front, the German labor market continued to support consumer confidence, a recent survey by market research group GfK indicated.
Brzeski observed "with employment and hours of work close to record highs, dropping inflation and wage increases, the labour market should continue to be a, if not "the", crucial driver of domestic demand this year."
A separate report from the Federal Statistical Office showed today that the seasonally adjusted unemployment rate remained unchanged at 5.6 percent in May. The number of unemployed persons also remained stable during the month, at around 2.34 million.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.