German Jobless Rate Declines

BERLIN — Unemployment fell sharply in Germany this month, data released Thursday showed, reflecting continued hiring despite fears of an economic slowdown as Europe’s debt crisis festers.

The Federal Labor Agency reported the unemployment rate dropped to 6.6 percent for September from 7 percent in August. Seasonally adjusted, the number of unemployed people declined by 26,000 from August, which the agency described as an unexpectedly high figure. Analysts had been expecting a drop of around 8,000.

Frank-Jürgen Weise, director of the agency, said there was particularly strong demand in retail, construction-related trades, tourism and health care, as well as for temporary workers.

The adjusted level of joblessness has now fallen to 2.92 million people, or 6.9 percent, the lowest for 20 years. The figures also show how Germany, Europe’s largest economy and one of the world’s leading export-driven economies, has fully recovered from the financial crisis of 2008, when almost 3.2 million people were registered as unemployed.

Analysts said the expansion of the labor market reflected high levels of orders for companies, the expansion of the services sector and the late ending of the summer holidays.

The adjusted employment figures lag by one month, however, which means that the real impact of the latest flare-up in the euro zone crisis will be clearer next month.

“The main risks presently stem from ramifications of the euro zone debt crisis, related banking sector concerns and the slow U.S. economy,” said Timo Klein, an economist at IHS Global Insight. He added that Germany’s economic recovery appeared strong enough to prevent a recession.

Growth in the German economy slowed during the second quarter of this year, to 0.1 percent, and private consumption contracted for the first time since 2009 as consumers held back on spending because of the uncertainties.

But Jens Weidmann, the president of the country’s central bank, the Bundesbank, said this week, “we expect economic activity to remain robust in the third quarter.”

The number of registered unemployed would have been much higher had the government during the 2008-9 financial crisis not subsidized a program whereby companies introduced reduced-time work programs, paying their staff members less in order to retain them. The difference in wages was partly made up by the state.

Figures from the labor agency showed that fewer companies were still working with short-time workers, especially the automobile industry, which has been lifted by growth in the Chinese market and the expansion there of the luxury car market as the middle class expands.

Article source: http://www.nytimes.com/2011/09/30/business/global/german-jobless-rate-declines.html?partner=rss&emc=rss