Labor Market In Holding Pattern For Now, But Weakness Lies Ahead

German employment rose further in February by +14k (+0.0%, vs +56k prior, revised from +57k) according to Destatis - but the detailed monthly report published by the employment agency points instead to some underlying softening in the labour market.

• Recent upticks in overall employment have been driven by part-time jobs, (part-time employment subject to social security contributions rose by 2.0% Y/Y in January, or 210k to 10.49mln, while full-time employment actually decreased by 5k). This is in line with prior Destatis data which showed that total hours worked in Germany actually decreased towards the end of 2023 (-1.0% Q/Q Q4, -0.3% Q3), almost levelling gains from earlier in the year.
• 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), also stood at a slightly higher level in February than in January (74.6k vs 62.5k).
• Separately, developments in the unemployment rate in March, compiled by the Bundesbank, were relatively muted - the number of unemployed persons rose by 4k (SA, vs 10k cons; 12k prior, revised from 11k) - while the unemployment rate (SA) remained at 5.9%.
• Data showing limited "exits" and "entries" to unemployment suggests that employers have been unwilling to extend hiring but also remain reluctant to cut staff, resulting in relative stasis in the jobless rate.
• Looking ahead, however, the unemployment is expected to see the impact of the ongoing labour market softening - MNI's collation of sellside consensus sees unemployment gradually ticking up to 6.2% in Q424 (though expectations haven't changed in the last three months).