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Economy in Brief

Good News on German Unemployment 
by Louise Curley January 3, 2006

Signs of improvement in the German economy have been coming to the fore. The latest bit of good news relates to unemployment conditions. The Federal Labor Agency reported that the number of registered workers without work adjusted for seasonal swings, in December fell by 110,000 to 4.64 million. the biggest drop since reunification. The unemployment rate fell to 11.2% from 11.4%. Registered unemployment in West Germany was 82, 000 lower in December than November, but was still 260,000 above December, 2004. Registered unemployment in East Germany, declined in December by 28,000 from November but was also 115,000 below December, 2004. The first chart shows the year to year changes in the number of registered unemployment in West and East Germany. The unemployment data in Germany were distorted early in 2005 when 200,000 people were added to the unemployment roles under the new definitions introduced by Hartz IV of the labor reforms.

In addition to the data on registered unemployment, the Federal Statistical Office publishes data based on concepts of the the International Labor Office (ILO). These data do not show the early 2005 distortion in the unemployment figures. The second chart compares the unemployment rate as measured by the two agencies. There is no rise in the rate of ILO unemployment in early 2005 comparable to that of the registered unemployment rate. According to the ILO concept, the unemployment rate appears to have shown a somewhat steeper down trend so far this year than the registered data. The latest data are for November. While employment rose by 15,0000 in November on a seasonally adjusted basis to 38,611 million, unemployment also rose by 7,000, taking the unemployment rate to 9.0% from 8.8% in October.

The ILO data form the basis of Eurostat's harmonized rates of unemployment for all the Euro Zone countries, but, as can seen in the third chart that compares Germany's ILO unemployment rate and the Eurostat harmonized rate, further adjustments are made to the harmonized indexes. The latest Eurostat Harmonized Index for Germany is October.

Number of Registered Unemployed, S. A. (000) Dec 05  Nov 05 Dec 04 M/M Dif       Y/Y Dif 2005 2004 2003 2002
Unified Germany   4638 4748 4493 -110 145 4803 4389 4383 4075
West Germany 3122 3204 2862 -82 266 3201 2789 2759 2509
 East Germany 1516 1544 1631 -28 -115 1612 1600 1624 1585
Unemployment Rate 11.2 11.4 10.8 -0.2 0.4 11.6 10.5 10.5 9.8
ILO Concept S. A. (000) Nov 05 Oct 05 Nov 04  M/M Dif       Y/Y Dif         2004    2003 2002 
Employment 38611 38596 38826 15 -215 38779 38632 383992
Unemployment 3800 3730 3910 70 110 3930 3710 3240
Unemployment Rate  9.0 8.8 9.2  0.2  -0.2    9.2  8.8 7.7
Eurostat Harmonized Rate for Germany  n.a 9.1  9.5         9.5 9.1 8.2
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