By Gareth Jones
BERLIN Oct 30 German joblessness rose for a
seventh month in a row in October, highlighting the
vulnerability of Europe's biggest economy to the euro zone
Economists expect the trend to reverse, however, as growth
revives in the new year.
The number of Germans out of a job rose to 2.937 million in
October, up 20,000 from the previous month. The consensus
forecast in a Reuters poll of 31 economists was for unemployment
to rise by 10,000..
Joblessness, however, remains near its lowest level since
German reunification more than two decades ago. Labour Office
data released on Tuesday showed the unemployment rate steady at
6.9 percent, unchanged from a revised figure for September.
This stands in marked contrast to the chronic joblessness
suffered by weaker members of the euro zone such as Spain, where
one in every two young people is unemployed.
"The weaker economic situation is having a noticeable impact
on the (German) labour market. However, the jobs market overall
is proving robust and is in good shape," said Frank-Juergen
Weise, head of the Labour Office.
The global slowdown and the euro zone's three-year debt
crisis are weighing on companies' readiness to invest and recent
surveys have shown business confidence in Europe's powerhouse
economy sagging badly, though few economists expect a recession.
"Today's numbers provide further evidence that the labour
market is gradually losing steam, indicating the cushioning
impact on the economy should peter out in the coming months,"
said Carsten Brzeski of ING Bank.
"However, the lack of qualified employees and still strong
labour demand in domestic sectors should make the current
slowdown a very gentle one."
Germany's economy powered through the first two years of the
euro zone sovereign debt crisis, racking up growth of 3 percent
in 2011, but has slowed steadily this year to 0.5 percent in the
first quarter and 0.3 percent in the second.
Chancellor Angela Merkel's centre-right coalition, which
faces an election next year, expects the German economy to grow
by only 0.8 percent overall this year and by 1 percent in 2013.
Economists noted that more companies, especially in the car
industry, had reintroduced short-time working and this would
have a negative impact on joblessness in the engineering sector.
Engineering association VDMA said German engineering orders
rose 11 percent in real terms in September from a year before
but it attributed the strong figure to one-off big ticket items
from abroad and said domestic orders fell 1 percent in the less
volatile three-month comparison.
In other signs of weakness, sports apparel maker
Puma said recently it was looking at more cost-cutting
measures after third-quarter results came in below expectations,
hit by the slowdown in Europe.
German industrial conglomerate Siemens aims to
slash production costs and could cut jobs as business this year
proves tougher than expected..
However, economists said the recent calming of investor
sentiment over the euro zone crisis should start to have a
positive impact on Germany's economic performance.
Euro zone economic sentiment fell less than expected in
October, data from Brussels showed on Tuesday.
"In the coming months, labour market data will probably be
rather weak. Things can only improve once the relative calm
currently experienced by financial markets is transferred to the
real economy," said Christian Schulz of Berenberg Bank.
"That will probably be at the start of next year, when the
economy is growing again. That will then have a delayed effect
on the labour market," he added.