(RTTNews) - Indicating that the German labor market is buoyant, despite increasing worries of an economic recession, the jobless rate decreased to a 16-year low in August.

Thursday, report from the Federal Employment Agency showed the seasonally adjusted jobless rate for the Eurozone’s largest economy decreased to 7.6% in August from 7.7% in July, while economists had expected the rate to stay at 7.8%. The current rate is the lowest since May 1992.

At the same time, the number of unemployed fell 40,000 in August from July after seasonal adjustment. The decrease was four times higher than the expected fall of 10,000. In July, the number of jobless had fallen 20,000. On an unadjusted basis, the total number of unemployed accounted for 3.196 million and the jobless rate declined to 7.6% from 7.7%.

The German economy shrank in the second quarter for the first time in almost four years on reduced investment in construction as well as machinery and equipment and a slump in household spending. According to the official report, Germany’ gross domestic product, or GDP, decreased 0.5% sequentially in the second quarter, after expanding 1.3% in the first quarter.

Economist at the BNP Paribas Economic Research, Fr�d�rique Cerisier said the unemployment rate is likely to stabilize before the end of the year as a substantial deceleration in employment growth is expected in the coming months.

Justifying the view, the economist said signs of moderation in job creations are clear. Moreover, recent surveys, including the PMI index for employment in services has shown sharp deterioration of hiring expectations.

Earlier in the day, Germany’s Federal Statistical Office said in its report that the German ILO seasonally adjusted jobless rate decreased to 7.3% in July from 8.4% in the year-ago period and 7.4% recorded in June. The rate for June was revised up from the initial estimate of 7.3%. The jobless rate for men stood at 7.4% and that for females was 7.2% for July.

According to the statistical office, the number of unemployed persons declined seasonally adjusted 12% or 430,000 annually to 3.16 million in July. Month-on-month, the number dropped 0.7%. In June, the number of unemployed had reached 3.18 million. Meanwhile, the number of persons in employment rose 1.4% or 562,000 over the previous year and totaled 40.16 million in July. On a monthly basis, the number declined 0.1% or 42,000, while when seasonally adjusted, it was up 0.1% or 33,000.

As firms have assessed the current business situation in Germany is unfavorable and projected further negative development in the coming half year, the German business confidence deteriorated more than expected in August, reaching the lowest level in three years. In addition, a gloomier economic outlook and concerns over rising inflation pulled German consumer confidence to a fresh five-year low.

According to a preliminary report based on six Lander released by the statistical office late on Wednesday, German consumer price inflation slowed to 3.1% in August from 3.3% in July. Economists had expected the annual inflation to ease to 3.2% in August after reaching its highest level in almost fifteen years in July.

On a monthly basis, consumer prices fell 0.3% in August, mainly due to relatively large price decreases for liquid fuel and motor fuels. Economists were expecting 0.2% fall in August.

Meanwhile, the harmonized consumer price index climbed 3.3% year-on-year, following a 3.5% rise in July. Compared with the previous month, the index was down 0.4% in August. The statistical office is set to release the final results on September 16.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2008 RealTimeTraders.com, Inc. All Rights Reserved

Posted in Categories: Economy, Eurozone, Forex, Releases, Stocks.

Subscribe by RSS Subscribe by Email