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Economy in Brief

German Labor Markets Maintain Gains; Unemployment at 4-Year Lows
by Carol Stone January 3, 2007

The German labor markets look quite firm, according to labor force and unemployment data reported today for November and December.

Total employment in November was 39.28 million, up 46,000 from October and 411,000 or 1.1% from November 2005. It has risen every month since January (seasonally adjusted). Annual revisions were included in this release, altering some prior employment levels and unemployment rates. The general pattern is not affected, however.

The number of job vacancies remains supportive to further employment growth. At 728,000 in December (seasonally adjusted), these rose 27,000 in the month and are up substantially from 486,000 a year ago.

The unemployment situation has gained greater clarity in the last couple of months. When we last examined the German labor data two months ago, the ILO-based definition had shown some hesitation and remained above a recent low, even as the so-called "registered unemployment" measure was coming down. Now, the ILO rate has hit a new low, 7.7% of the labor force and the lowest since July 2002. This is off 1.2% from November 2005. The Germans' preferred measure, the "registered" unemployment rate, dipped below 10% to 9.8%, its first move into single digits since September 2002. This latter move is all the more significant for definitional changes in early 2005 that raised the level of reported unemployment. So the rate on this "new" basis is now well below many months calculated on the "old" basis and in fact is just 0.6% above its 2001 cycle low.

These labor market data correspond to results of recent business surveys in Germany, which we have described elsewhere as showing "growing optimism". They also mirror the improving employment readings in the purchasing manager surveys covering November; the manufacturing sector eased fractionally in its December results (reported yesterday), but remained in the high range of last spring. Taken together, it all seems to be showing improving conditions in Germany.

Germany: Seas Adj, ex as noted Dec 2006 Nov 2006 Oct 2006 Year Ago 2005 2004 2003
LFS Employment (mil) -- 39.28 39.24 38.87 38.82 38.88 38.72
Change (thous) -- +46 +35 +411 -53 +151 -368
Yr/Yr % Chg NSA --     +1.1 -0.1 +0.4 -0.9
Unemployment Rate (%, ILO Def.) -- 7.7 7.8 8.9 9.1 9.2 8.8
Registered Unemployment Rate (%) 9.8 10.1 10.3 11.3 10.8 11.7 10.6
Job Vacancies (thous) 728 701 671 486 413 284 352
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