GERMAN DATA
Latest German labour market data on balance showed sign of deterioration, with headline employment -21k on a monthly basis in August for its sharpest drop since January 2021. Elsewhere, unemployment and firms' expectations for business-cycle related state benefit utilisation went up. The ifo employment index leaves little room for hope of an imminent revival, having fallen again in September to its lowest since the initial pandemic drop. It appears that ongoing economy-wide weakness is filtering through to the labour market, which had remained quite resilient.
- Employment declined by a seasonally adjusted 21k in August vs +4k July, its first decline since September 2023 and the sharpest drop since January 2021.
- More timely unemployment data for September rose a little more than expected (17k vs 13.5k cons) after a soft 2k in August on a seasonally-adjusted basis. The unemployment rate meanwhile remained at 6.0%, as expected, for a four consecutive month at highs since May 2021.
- The expected number of employees impacted by 'Kurzarbeit' (which has to be reported in advance by companies and can be interpreted as an early indicator for future use of state benefits) increased by around 50% in September vs August (to 65k September through 1st-23rd) although it can be volatile.
- Labour demand, reflected by the employment agency's seasonally-adjusted job index "BA-X", rose ever so slightly in September, by 1 point to 107 but is still down 9pts since Sep 2023 and compares to an all-time high of 138p in May 2022 (the index is normalised to 2015=100 and reflects vacancy levels and activity).
- Recall the IFO employment index signals further softening ahead, declining for the fourth consecutive month in September to 94.0 (-0.8pts), its lowest levels since initial pandemic lows, with weakness centred around manufacturing.
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