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Revisions Suggests Weaker Labour Market Than Previously Thought

Today's German labour market data release included a sharp rise in unemployment in October (+30k, vs +14k expected), with the unemployment rate hitting a post-June 2021 high of 5.8%. The report indicated that the labour market is weakening after having been perceived as one of the areas of relative strength in a stagnant German economy. But less noticed was that the Bundesbank revised away the previously reported employment jump in the summer which had seemed at odds with the broadly weak economic landscape.
  • August was revised down to negative -10k from what had appeared to be a 6-month high +35k gain, with July revised down to +1k from +17k. In other words employment fell a cumulative -6k in Q3, whereas the pre-revision figures would have indicated a +55k gain.
  • This paints a picture of a German job market that is more consistent with a contractionary Q3 (flash GDP printed -0.1% Q/Q) and IFO's employment barometer which has suggested for months that German firms have been increasingly cautious about adding to their workforces.

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