German Unemployment Rises Sharply Amid Weak Economic Activity

Germany’s unemployment rose more than expected in August as the ongoing weakness in the economic activity weighed on job creation.

The monthly increase in the number of unemployed rose sharply to 18,000 from 1,000 in July, the Federal Labor Agency reported Thursday. Economists had forecast a more moderate increase of 10,000. Unemployment totaled 2.63 million.

However, the unemployment rate held steady at 5.7 percent in August, as expected.

“The summer break and the weak economy are leaving their mark on the labor market,” Andrea Nahles, chairperson of the Federal Labor Agency said at the press conference. Nonetheless, the labor market is in solid condition, Nahles added.

The labor force survey data from Destatis today showed that the adjusted jobless rate remained unchanged at 2.9 percent in July. The number of unemployed totaled 1.29 million, down 5,000 from June.

The latest Purchasing Managers’ survey showed that the private sector activity suffered the biggest fall in more than three years in August. There was a slight decrease in factory workforce numbers and service sector job creation was virtually stalled, the survey showed.

Suggesting weak consumer spending in July, official data today showed that retail sales declined more than expected on falling food turnover.

Retail sales fell 2.2 percent on a yearly basis in July compared to economists’ forecast of 1.0 percent decrease.

Real food sales were down 1.8 percent from the last year. Consumers bought less grocery than in the same period last year but they had to spend more money on them. Non-food turnover was 1.9 percent below the level of the same last year.

On a monthly basis, retail sales slid 0.8 percent in July, confounding expectations for an increase of 0.3 percent.

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