The unemployment rate was unchanged at 6.7% in July, for the fifth consecutive month, standing at a twenty-year low. The German labour market should benefit further from the current recovery.
  • In July, the jobless rate was unchanged at 6.7%, thus standing at a twenty-year low. In addition unemployment decreased by 12K, down for the first time in three months. Indeed surveys indicated that job conditions were tight in July. For instance Markit indicated that with output and new orders rising, German companies were encouraged to take on additional workers in July. In addition anecdotal evidence suggested that payroll numbers rose in line with stronger demand and efforts to reduce backlogs.

  • Employment (published with one-month lag) increased in June, up 16K over the month, recording the smallest rise since November 2013. It was up 0.9% y/y in June, accelerating from 0.5% twelve months ago (see chart).

  • All in all, the German labour market seems to be benefiting from the current recovery. As mentioned by the Labour office, the job market is stable on the whole. The stability of the employment situation should back household confidence and boost their real disposable income. According to GfK released last week, consumer confidence index was up from 8.9 in July to 9.0 in August, the highest level in nearly eight years. The increase in income expectations to the highest value since reunification is particularly noteworthy. According to the GfK survey, the basis for this is the stable job market situation. In addition in the wake of good salary developments, Germans who collect pensions can also expect real improvement this year. After many years of freezes or even drops in real income, this is a very positive outlook for pensioners.

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