German jobless rise biggest in five years, mild winter blamed

BERLIN Wed May 28, 2014 6:40am EDT

The entrance of the Jobcenter in Eichstaett August 29 2013. Eichstaett is Germany's city with the lowest unempolyment rate. REUTERS/Michael Dalder

The entrance of the Jobcenter in Eichstaett August 29 2013. Eichstaett is Germany's city with the lowest unempolyment rate.

Credit: Reuters/Michael Dalder

BERLIN (Reuters) - German unemployment posted its strongest monthly rise in over five years in May, but the Labour Office said mild winter weather was largely to blame for the unexpectedly weak figures.

The number of people out of work increased by 24,000 to 2.905 million on a seasonally-adjusted basis, data showed on Wednesday. It was the largest rise since April 2009, when Germany was in the midst of its deepest post-war recession due to the global financial crisis.

The mid-range forecast in a Reuters poll had been for a drop of 15,000.

Because of the mild winter, the Labour Office said employers - presumably in weather-sensitive sectors like construction - had not reduced headcount at the usual rate in the early months of the year. Therefore, the traditional spring bounceback in hiring failed to materialise.

"The mild winter, which had flattered German economic data a bit in the first quarter with strong GDP growth and job market gains, is now striking back," said Christian Schulz, an economist at Berenberg.

But he added that the German labour market remained on a "strong positive trend" despite the setback in May.

Europe's largest economy grew by a seasonally adjusted 0.8 percent in the first quarter of 2014, its strongest performance in three years. The rise was fuelled by private consumption, construction spending and inventories. Trade, the traditional driver of the German economy, was a drag on growth.

The data from the Labour Office showed the unemployment rate held steady at 6.7 percent in May on a seasonally adjusted basis. The unadjusted jobless total dipped by 61,000 to 2.88 million.

(Writing by Noah Barkin; Editing by Stephen Brown)

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