Q. How far will German unemployment fall in H2?
A: The latest labour market data in the Eurozone’s largest economy are uplifting reading. Granted, the headline joblessness rate was unchanged at 5.9% in June, but this followed a downwardly-revised headline in May, and claims plunged by 38.0K, after a 19.0K slide in May. What’s more, leading indicators are now going vertical, pointing a further acceleration in the fall in jobless claims in the next six months. Taking the IAB indicator at face value, claims will soon be falling by 80-to-90K per month, which would drive headline unemployment down to just over 5% at the end of the year. Using Eurostat’s ILO definition, this would translate into a decline to about 3.5%, from the current level of 4.4%. In short; German unemployment is now falling, sharply.
Claus Vistesen, Chief Eurozone Economist
