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Economy in Brief

Euro Crisis Beginning to Affect German Economy
by Louise Curley  July 31, 2012

The Euro Crisis is beginning to affect the German economy which heretofore has seemed immune.  Unemployment in Germany has stated to inch  up since March of this year.  At that time registered unemployment was 2,856 thousand and the unemployment rate was 6.8%.  In July, unemployment was up to 2,888 thousand an increase of 32 thousand.  The increase did not, however, result in an increase in the unemployment rate which has remained at 6.8% in each month of this year.  The harmonized estimate of the German unemployment rate  published by Eurostat, available in the Haver Data Base, EUDATA, is generally lower than the registered unemployment rate, as shown in the first chart..  The definition of registered unemployment is different from that of Eurostat harmonized rate. The latter defines as unemployed those individuals , aged between 15 and 74 who are without work, available to work within the next two weeks and have actively sought work at some time during the previous four weeks. In Germany the registered unemployed include a smaller age group-- those aged 15 to 65--which tends to lower the number of unemployed, but  the registered rate also includes individuals who are working 15 hours or less and those who have found a job, but are not yet working, both of which tend to increase the number of unemployed.  Up until December,2004. the registered employment and unemployment data were published as of the end of the month,  From 2005 forward the registered data are as of the middle of the month; the Eurostat data are as of the end of the month.

 The Ifo's Employment Barometer has been pointing to a decline in employment since the March of 2011, but employment has kept rising. The barometer is based on a survey of some 7000 firms engaged in manufacturing, construction, wholesaling and retailing. The Proprietors are asked about their staffing plans three months ahead. and the results are reported in an index with a base year of 2005. The correlation between the barometer and employment is only 57% and an R2 of 32%, which means the barometer explains 32% of the variation in employment, as shown  in the second chart..

Jul '12 Jun '12 May'12 April '12 March '12 Feb '12 Jan '12
Registered Unemployment (Thousand Persons) 2888 2881 2874 2873 2856 2869 2868
Unemployment Rate (%) 6.8% 6.8% 6.8% 6.8% 6.8% 6.8% 6.8%
Harmonized Unemployment Rate (%) 5.4% 5.5% 5.5% 5.5% 5.6% 5.6%
Employment Barometer (2005=100) 109.3 110.9 110.1 111.3 111.6 112.2 112.1
Employment (Million Persons) 41.6 41.6 41.6 41.6 41.6 41.5 41.5
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