According to job Office figures issued on Thursday, German unemployment grew more than expected in October, showing some cracks in what has been a very healthy job market.
The number of jobless people increased by 30,000 in seasonally adjusted numbers to 2.678 million, according to the Federal Labour Office. Reuters surveyed analysts, who predicted a 15,000 increase.
Andrea Nahles, chairman of The Federal Employment Agency pointed out that the German economy has been unsatisfactory for the last year. Therefore, the effect this has had on the employment market has not progressed further.
The seasonally adjusted unemployment rate for October rose to 5.8% from 5.7% in September.
The Federal Labour Office reported that there were 749,000 job opportunities in October which is 98,000 less than in October 2022.
Data released on Thursday showed that industry labour numbers in Germany declined significantly and quickly in October.
“However, when compared to previous recessions, the current job scenario appears relatively favourable given the overall situation in the manufacturing sector,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank (HCOB).
He said that this was due to the German economy’s chronic labour shortage, which means that most businesses are retaining their current employees.
“Labour hoarding was the main reason why employment remained so resilient even when the economy was struggling,” said Tomas Dvorak, senior economist at Oxford Economics.
However, he warned that labour hoarding only works when the economic downturn is temporary, and now that enterprises are understanding the economic slowdown will endure, they will have to lay off people.
“It might not be a severe slowdown, but it’s going to be a slow burner,” Dvorak said in an interview.
