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German Unemployment Increases Less Than Expected

germany unemployement 032918 01jul20 lt

Despite the coronavirus pandemic weighing on the German economic activity, unemployment increased less than expected in June, helped by the short-time work program.

Data from the Federal Employment Agency revealed that the number of unemployed persons rose by 69,000 in June from previous month, which was much less than economists' forecast of 120,000. In May, the number of people out of work had increased by 237,000.

The unemployment rate rose to 6.4 percent in June from 6.3 percent a month ago. The rate was expected to climb to 6.6 percent.

"The labor market remains under pressure due to the corona pandemic," Federal Employment Agency CEO Detlef Scheele said. However, the massive use of short-time work is stabilizing the labor market.

On an unadjusted basis, the jobless rate climbed to 6.2 percent from 6.1 percent in May. The number of unemployed persons totaled 2.85 million, up 40,000 from last month.

According to labor force survey, the jobless rate rose slightly to 3.9 percent in May from 3.8 percent in April.

On an unadjusted basis, the unemployment rate came in at 4.4 percent versus 4.3 percent a month ago, Destatis reported.

Nearly 1.93 million people were unemployed in May, up 41,000, or 2.1 percent from April.

Elsewhere, the ifo Institute said the coronavirus pandemic and the measures to contain it have plunged the German economy into what is by far the deepest recession in its post-war history.

The think tank expects gross domestic product to fall 11.9 percent in the second quarter of 2020. However, GDP is forecast to expand 6.9 percent in the third quarter and 3.8 percent in the fourth quarter.

Economic output is expected to fall 6.7 percent in the whole year of 2020 before expanding 6.4 percent in 2021.

Earlier in the day, official data showed that Germany's retail sales rebounded in May, reflecting the easing of lockdown measures.

Retail turnover increased 3.8 percent on a yearly basis, reversing a 6.4 percent fall in April. Economists had forecast sales to fall 3.5 percent.

Month-on-month, retail sales advanced 13.9 percent, in contrast to a decline of 6.5 percent logged in April. This was much bigger than economists' forecast of 3.9 percent.

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