German labor market resilient despite unemployment uptick

[September 30, 2015]  By Michael Nienaber

BERLIN (Reuters) - German unemployment inched up in September due partly to late school holidays in some states, but the jobless rate held at a post-reunification low in a further sign that consumer spending could propel growth in Europe's largest economy this year.

The Federal Labor Office reported on Wednesday that the seasonally-adjusted unemployment total rose by 2,000 to 2.795 million. That compared with the Reuters consensus forecast for a drop of 5,000.

The unadjusted jobless total fell, however, by around 88,000 to 2.708 million, the lowest level since 1991, the Office said. The jobless rate held steady at 6.4 percent.

"Although there was an uptick on a seasonally-adjusted basis, the overall positive trend on the labor market continues," Federal Labor Office chief Frank-Juergen Weise said.

ING chief economist Carsten Brzeski said the slight increase in the seasonally adjusted total was probably the effect of summer holidays ending in September in more regional states than usual.

Overall, the labor market looked strong and its prospects remained bright, he said.
 

"The German labor market will remain an important growth driver this year and beyond," he said.

In another good sign for private consumption, German retail sales jumped by 2.8 percent in real terms from January to August compared with the same period in 2014.

The statistics office said that was the strongest increase it had recorded for that period since it began collecting the data in 1994.

Germany's HDE retail association has said it sees a record year ahead thanks to rising wages and low inflation.

The Munich-based Ifo think-tank said last week the current influx of refugees, expected to hit a record 800,000 this year, is boosting the retail sector, in particular sales of groceries.

BayernLB economist Stefan Kipar said the retail sector would benefit from the influx of migrants.

"Every refugee who spends helps the retail sector,” he said.

However, the arrival of large numbers of refugees is expected push up unemployment in Germany next year by 70,000, the labor office research institute IAB has said.

Senior conservatives are therefore urging a flexible application of the new minimum wage in relation to refugees, arguing that those with minimal qualifications could struggle to find jobs at the 8.50 euro ($9.60) hourly rate.

(Additional reporting by Tina Bellon; Writing by Michael Nienaber; Editing by Noah Barkin and Madeline Chambers)

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