Unemployment in Germany increased for a fourth straight month in July as employers remained reluctant to hire more staff amid the intensified debt crisis in Eurozone and the uncertainty surrounding the economic prospects of the currency bloc.
The Federal Labor Agency said Tuesday that the number of unemployed rose by 7,000 in July from a month earlier to 2.89 million. This was in line with economists' forecasts and followed a similar increase in the previous month.
The jobless rate held steady at 6.8 percent, as expected. Meanwhile, job vacancies declined by 7,000 month-on-month in July. This followed a decline of 5,000 vacancies in June.
"To some extent, the labour market has been Germany's active immunisation against the ongoing Eurozone crisis. However, signs that this immunisation is fading away are hard to miss," Carsten Brzeski, a senior economist at ING Bank NV said.
"Employers have continuously downscaled their recruitment plans and employment expectations in the manufacturing industry have dropped to the lowest level since April 2010," he added.
Earlier today, the Federal Statistical Office said the seasonally adjusted unemployment rate in Germany declined to 5.4 percent in June from 5.5 percent in May and 6 percent a year ago.
The number of unemployed persons, on an unadjusted basis, declined by 5.6 percent month-on-month to 2.19 million in June. Compared to June last year, the number of unemployed was 12.7 percent lower, according to the statistical office.
Employment also fell in June, by 0.6 percent on a month-on-month basis to 39.54 million, it said.
Ifo Institute said earlier this month that German business confidence fell for a third consecutive month in June, reaching the lowest level in more than two years.
Today's data showed that retail sales dropped unexpectedly for the third consecutive month in June, falling by 0.1 percent from May. Nonetheless, the rate of decline was slower than the 0.3 percent drop seen in May.
Market research group Gfk said last week that sentiment among German households may improve slightly in August with high incomes boosting consumers' willingness to spend on big-ticket items.
The stable employment situation with falling unemployment and the resultant income increases are improving planning security, the GfK said in the report.
Moody's Investors Service has warned Germany that they may lose its coveted triple-A credit ratings due to intensified uncertainty regarding the outcome of the debt crisis, while cutting the outlook on the sovereigns' Aaa rating to 'negative' from 'stable' on July 23.
by RTT Staff Writer
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