Financial news, relevant trading information, and transparent commentary issues concerning all major markets.
Thursday, 28 March 2013
German Unemployment Unexpectedly Rises Amid Euro Crisis
By Stefan Riecher - Mar 28, 2013 1:26 PM GMT+0400
German unemployment unexpectedly rose in March as renewed tensions in financial markets increased concerns the euro region’s recovery will falter.
The number of people out of work increased a seasonally adjusted 13,000 to 2.94 million, the Nuremberg-based Federal Labor Agency said today. Economists had predicted a decline of 2,000, according to the median of 24 estimates in a Bloomberg News survey. The adjusted jobless rate held at 6.9 percent, slightly above a two-decade low of 6.8 percent.
Cyclists pass an Agentur fuer Arbeit, or unemployment office, in Munich. Photographer: Michael Nagle/Bloomberg
The euro area, the country’s largest export market, remains mired in recession and Cyprus’s botched bailout is weighing on confidence. Sentiment among entrepreneurs fell from a 10-month high in March and manufacturing output unexpectedly dropped. Still, the Bundesbank expects the German economy will return to growth in the current quarter after shrinking 0.6 percent in the final three months of 2012.
“The economic weakness in Europe is, of course, affecting Germany,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. “A global economic recovery later this year may help Germany bring down unemployment but for now, there’s still some uncertainty.”
The euro extended losses after the report, trading at $1.2766 at 10:16 a.m. in Frankfurt.
Unemployment was unchanged in February, the labor agency said. It had previously reported a decline of 3,000.
Siemens AG (SIE), Europe’s biggest engineering company, is preparing to eliminate as many as 1,400 jobs at three sites of its energy and infrastructure businesses to bolster profitability, according to two people familiar with the matter.
“Demand for new employees is shrinking, but still at a high level,” said Frank-Juergen Weise, president of the Federal Labor Agency said at a press conference following the release. “The higher seasonally-adjusted jobless number is partly due to the cold weather in March.”
The European Central Bank cut its economic forecasts this month and now expects the euro-area economy to shrink 0.5 percent this year before growing 1 percent in 2014. While ECB President Mario Draghi foresees a gradual recovery later this year, the economic risks are still “on the downside,” he said on March 7.
Some German companies are making up for lower demand from the 17-nation currency bloc with sales to faster-growing markets outside Europe.
Schaeffler AG, the industrial-bearing maker that’s the biggest investor in car-parts producerContinental AG (CON), said last week demand in North America and Asia will more than offset a drop in Europe to allow sales growth in 2013.
The Bundesbank forecasts growth of 0.4 percent this year, with exports and factory output helping the German economy gather momentum.
Consumption may get a boost from higher wages. German workers won deals of as much as 6.5 percent last year and IG Metall, the country’s most powerful labor union, is seeking pay increases of 5.5 percent in 2013.
“The German labor market is robust, despite the uncertainty about the euro area,” said Lothar Hessler, an economist at HSBC Trinkaus & Burkhardt AG in Dusseldorf. “The unemployment rate will move sideways this year before posting new record lows in 2014.”