Germany February seasonally adjusted unemployment rises 5,000; estimated increase 14,000

Germany February seasonally adjusted unemployment rises 5,000; estimated increase 14,000

Germany's labor market showed signs of weakness in February, with unemployment rates rising unexpectedly. According to the latest data from the Federal Employment Agency (BA), the number of unemployed persons increased by 11,000 on a seasonally-adjusted basis, contrasting the estimated increase of 14,000 [1]. This marks the first increase in unemployment since December 2023.

The economic environment has been dampening the overall strength of the labor market, with unemployment and underemployment recording increases in February. The demand for new workers from businesses has also declined [1]. In February, the number of unemployed persons stood at 2,814,000, marking an increase of 194,000 compared to the same month last year [1]. The unemployment rate remained unchanged at 6.1% [1].

Underemployment, which includes short-term incapacity to work, also increased by 15,000 compared with the previous month [1]. In February, 3,643,000 people were underemployed, representing a year-over-year increase of 161,000, with 37,000 of these individuals being citizens of Ukraine [1].

Short-time work, a measure taken by companies to reduce working hours rather than laying off employees, has also been on the rise. In February, 58,000 people reported short-time work, which is a significant increase from the same period last month [1]. Preliminary data from the Federal Employment Agency suggests that 175,000 employees received the cyclical short-time allowance in February, down from 186,000 in November and 162,000 in October [1].

The number of economically active individuals, according to the domestic concept, increased by 54,000 on a seasonally-adjusted basis in January 2024 compared with the previous month [1]. However, the unemployment rate, which is calculated as the ratio of unemployed individuals to the total labor force, remains a concern.

In conclusion, Germany's unemployment rate unexpectedly rose in February, marking the first increase since December 2023. The weak economic environment, declining demand for new workers, and increasing underemployment and short-time work all contribute to this trend. The Federal Employment Agency will release further data on the labor market in the coming months.

References:
[1] Federal Employment Agency. (2024, September 1). The labour market in February 2024. https://www.arbeitsagentur.de/en/press/2024-09-the-labour-market-in-february-2024