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Germany Sees Greatest Relative Easing In European Labor Market [2/2]

MACRO ANALYSIS
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  • The country breakdown within the Eurozone is notable, with Germany a clear standout as its unemployment rate has been steadily trending higher whereas other major countries are broadly at zero on a Sahm Rule basis [using seasonally adjusted Eurostat data for June for comparability].
  • The above points show recent trends and don’t necessarily account for how tight labor markets were, both at the start of the pandemic or how tight they became last year.
  • Nevertheless, compare latest values with both 2019 averages and long-term historical averages (covering the sovereign debt crisis for the Eurozone) and this German relative underperformance within Europe continues to be seen [see table].
  • Compared with 2019 averages, Canada, US, Australia and Germany have all seen broadly similar increases of 0.4-0.7pps and with other countries still notably tighter.
  • All of the above countries continue to see tighter labor markets than their long-term averages, although Canada and Germany have closed the gap the most.

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  • The country breakdown within the Eurozone is notable, with Germany a clear standout as its unemployment rate has been steadily trending higher whereas other major countries are broadly at zero on a Sahm Rule basis [using seasonally adjusted Eurostat data for June for comparability].
  • The above points show recent trends and don’t necessarily account for how tight labor markets were, both at the start of the pandemic or how tight they became last year.
  • Nevertheless, compare latest values with both 2019 averages and long-term historical averages (covering the sovereign debt crisis for the Eurozone) and this German relative underperformance within Europe continues to be seen [see table].
  • Compared with 2019 averages, Canada, US, Australia and Germany have all seen broadly similar increases of 0.4-0.7pps and with other countries still notably tighter.
  • All of the above countries continue to see tighter labor markets than their long-term averages, although Canada and Germany have closed the gap the most.