The unemployment rate was unchanged at 6.7% in March, for the second consecutive month, down to a twenty-year low. The German labour market should benefit further from the current recovery.

  • In March, the jobless rate was unchanged at 6.7% (February has been revised downward from 6.8% to 6.7%), thus standing at a twenty-year low.

  • At 2.901 million, unemployment decreased by 12K, down for the fourth consecutive month. We expected a decrease, as surveys were indicating unemployment should have fallen in March. For instance the Flash composite PMI employment index remained above the 50- threshold which separates contraction from expansion for the third consecutive month in March up two points to 52.8, the highest level since November 2011.

  • In addition, employment (published with one-month lag) increased over the month in February, up 48K, recording the largest increase since January 2012. It was thus up 0.7% y/y in February, accelerating from a 0.5% trough during the first half of 2013 (see chart).

  • All in all, the German labour market seems to be benefiting from the current recovery. In turn, this should back household confidence and boost their real disposable income. According to GfK consumer confidence survey released last week, the mood of German consumers was notably buoyant in March. Household confidence index was up from 8.3 in February to 8.5 in March, the highest level since January 2007 and is forecast at 8.5 in April. Indeed conditions are met to back household confidence, ie stable labour market, good income development and a moderate rate of inflation.

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