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Latest Data Sends Mixed Labour Market Signals

GERMAN DATA
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Latest German labour market data has sent some mixed signals: employment growth accelerated in April but unemployment ticked up in May. Other hard data points in different directions while not suggesting a decisive development towards firming or softening at this time.

  • Unemployment rose more than expected in May, by 25k (7k cons; 11k prior, revised from 10k; highest rate since October 2023) in May on a seasonally-adjusted basis. The SA unemployment rate remained unchanged as expected. The uptick reflects the still comparatively tense situation in overall economic activity, the employment agency said.
  • But employment rose by 25k in April (latest month for which data is available) at its fastest pace since March 2023 in an extension of its all-time high on a seasonally-adjusted basis. Employment gains since the beginning of 2024 are still solely driven by part-time jobs, though.
  • 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), partly reversed its April spike in May on a like-for-like comparison of the employment agency (broadly -25% M/M, though the measure can be volatile).
  • Underemployment excl. Kurzarbeit increased by 15k in May on a seasonally-adjusted basis (vs +11.0k in April).
  • Seasonally-adjusted labour demand, reflected by the agency's job index "BA-X", remained at 111 points in May (-10p vs May 2023; all-time high of 138p in May 2022; the index is normalised to 2015=100 and reflects vacancy levels and activity).
  • Looking ahead, forecasts and sentiment indicators suggest that the German labour market will soften slightly - the unemployment rate is expected to increase to up to 6.1% in the coming quarters according to MNI's collation of sellside consensus and the IFO Employment Barometer has printed in contractionary territory for 13 months consecutively (it has ticked up slightly in May, though, to 96.3 vs 96.0 Apr).

MNI, Bundesarbeitsagentur, Bloomberg

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Latest German labour market data has sent some mixed signals: employment growth accelerated in April but unemployment ticked up in May. Other hard data points in different directions while not suggesting a decisive development towards firming or softening at this time.

  • Unemployment rose more than expected in May, by 25k (7k cons; 11k prior, revised from 10k; highest rate since October 2023) in May on a seasonally-adjusted basis. The SA unemployment rate remained unchanged as expected. The uptick reflects the still comparatively tense situation in overall economic activity, the employment agency said.
  • But employment rose by 25k in April (latest month for which data is available) at its fastest pace since March 2023 in an extension of its all-time high on a seasonally-adjusted basis. Employment gains since the beginning of 2024 are still solely driven by part-time jobs, though.
  • 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), partly reversed its April spike in May on a like-for-like comparison of the employment agency (broadly -25% M/M, though the measure can be volatile).
  • Underemployment excl. Kurzarbeit increased by 15k in May on a seasonally-adjusted basis (vs +11.0k in April).
  • Seasonally-adjusted labour demand, reflected by the agency's job index "BA-X", remained at 111 points in May (-10p vs May 2023; all-time high of 138p in May 2022; the index is normalised to 2015=100 and reflects vacancy levels and activity).
  • Looking ahead, forecasts and sentiment indicators suggest that the German labour market will soften slightly - the unemployment rate is expected to increase to up to 6.1% in the coming quarters according to MNI's collation of sellside consensus and the IFO Employment Barometer has printed in contractionary territory for 13 months consecutively (it has ticked up slightly in May, though, to 96.3 vs 96.0 Apr).

MNI, Bundesarbeitsagentur, Bloomberg