GERMAN DATA: Labour Market Data Marginally Weak, Slightly Brighter Than Lastly

German labour market data remains soft overall, but some parts of today's release were marginally better than last month. Unemployment rose less, employment still rose slightly, and worker state benefits are set to be used a bit less. Labour demand decreased slightly, however, and looking ahead, some more softening appears to be in the pipeline.

• Unemployment rose less than expected in August, by 2k (vs +16k cons); that was the lowest rise since July 2023 (17k prior, revised from 18k) on a seasonally-adjusted basis. The (seasonally-adjusted) unemployment rate remained at 6.0%, as expected.
• Employment rose by 5k in July (latest month for which data is available; vs 9k June) in a further extension of all-time high levels on a seasonally-adjusted basis. Employment gains since the beginning of 2024 continue to be solely driven by part-time employment, according to the employment agency.
• 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) declined by around a third in August vs July according to the employment agency (40k August 1-26; note that the measure can be volatile).
• Labour demand, reflected by the agency's seasonally-adjusted job index "BA-X", declined again in August, by 1 point to 106 (-11p vs July 2023; all-time high of 138p in May 2022; the index is normalised to 2015=100 and reflects vacancy levels and activity).
• Looking ahead, the IFO employment index signals further softening coming - it declined for the third consecutive time in August, to 94.8 (vs 95.3 July), with weakness particularly in the manufacturing and trade sectors.