German Unemployment Steady At 5.5%

germanyunemployment jan21 31jan23 lt

Germany's unemployment rate remained unchanged at a low level at the start of the year despite the economy showing signs of a recession, official data revealed on Tuesday.

The unemployment rate held steady at 5.5 percent in January, the Federal Labor Agency reported. The rate also matched economists' expectations.

The number of people out of work decreased unexpectedly by 22,000 in January after a drop of 13,000 in December. Economists had forecast an increase of 5,000.

The labor market remained stable at the beginning of the year, Andrea Nahles, chairperson of the Federal Labor Agency, said. However, the effects of the geopolitical and economic uncertainties can still be seen, she noted.

In seasonally adjusted terms, the number of unemployed rose to 2.6 million in January.

Only a small increase in unemployment in January shows that the labor market remains an important source of resilience in the economy, ING economist Carsten Brzeski said.

"A combination of fiscal stimulus, furlough schemes and demographic change seems to have made the German labor market almost invincible," Brzeski added.

In the coming years, the economist said the labor market will be another symbol of the structural transition that the entire economy will have to undergo.

The unemployment rate fell to an adjusted 2.9 percent in December from 3.0 percent a month ago, the labor force survey from the statistical office showed today. Unemployment decreased by 10,900 to 1.30 million.

On an unadjusted basis, the jobless rate slid to 2.8 percent from 3.0 percent a year ago.

The labor market remained strong despite the economy contracting 0.2 percent in the fourth quarter largely due to the fall in private consumption.

Data released earlier on Tuesday showed a sharp fall in retail sales in December. Retail turnover decreased 5.3 percent, in contrast to the 1.9 percent increase in November and the 0.2 percent rise economists' had forecast.

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