Germany’s unemployment is not falling, and the government is starting to panic

Germany’s unemployment data rose more than expected in July, highlighting the current economic challenges facing Europe’s largest economy. The Federal Labor Office released data on Wednesday that demonstrated this.

According to the Bureau, the seasonally adjusted number of unemployed rose by 18,000 to a total of 2.8 million. Analysts polled by Reuters had expected an increase of 15,000. The seasonally adjusted unemployment rate remained unchanged at 6.0 percent. Here is the graph for the percentage.

Daniel Terzenbach of the Federal Labor Office explains, “The weak economic development puts a strain on the labor market.” He adds, “At the beginning of the summer break, unemployment and underemployment rose more than usual.”

The German economy, which had the worst performance among major economies last year, continues to struggle with the fallout from high energy costs, weak global demand, and record low interest rates. The Federal Statistical Office reported Tuesday that the economy unexpectedly contracted in the second quarter after narrowly avoiding a recession earlier in the year.

ING economist Carsten Brzeski commented, “The strong labor market has been an important factor in the economy’s resilience in recent years, but he stressed that this has not been enough to prevent the decline in private consumption over the past two years.” Brzeski added, “Looking ahead, the continued rise in bankruptcies combined with declining hiring plans in the manufacturing and service sectors does not bode well for labor market developments in the coming months.”

The Ifo Institute’s employment barometer fell to 95.4 points in July, the lowest level since February. According to the Ifo survey released Wednesday, only service providers are currently partly hiring new staff, but in smaller numbers than in the previous month.

At present, the government is doing very little on the subject, merely trying to cut public spending and bickering. Meanwhile, Deutsche Bahn has announced that it plans to lay off 30,000 workers.