GERMAN DATA
Latest German labour market data on balance showed some signs of revival. Employment recovered for the second month straight, and the unemployment rate unexpectedly remained flat - meaning for the moment conditions remain stable. However, sentiment indicates further softening ahead, and labour demand is well below its 2022 highs.
- Employment rose by 24k in November vs +12k October on a seasonally adjusted basis, its second consecutive increase (after four declines Jun-Sep) and strongest sequential rise since December 2023.
- More timely unemployment data for December rose a little less than expected (10k vs 15k cons) after +6k in November (revised from 7k) on a seasonally-adjusted basis. The unemployment rate remained at 6.1%, below the 6.2% expected.
- 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) decreased by around 15% in December vs November (to 55k MMM through 1st-26th) although it can be volatile. Actual latest 'Kurzarbeit' utilisation data (for Oct) showed some increase, however.
- Labour demand, reflected by the employment agency's seasonally-adjusted job index "BA-X", was unchanged in December at 106 but is still down 9pts since Dec 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).
- Rates of "quits" and "entries" into and from unemployment both continue to print low, the "entry" rate has increased by around 10% from 2022 lows but remains below pre-pandemic levels.
- Recall the IFO employment index signals further softening ahead, declining for the seventh consecutive month in September to 92.4 (-0.9pts), its lowest levels since initial pandemic lows, with weakness centered around manufacturing.
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