Unemployment in Germany fell below 3m in October for the first time in 18 years, according to unadjusted figures released by the federal labour office. The government in Berlin greeted the news with delight and saw it as confirmation that its measures to revive the economy from last year’s recession had been timely and effective.
Seasonally adjusted jobless figures showed rather less improvement, with a decline of just 3,000 in registered unemployed for a total figure of 3.153m, or 7.5 per cent of the labour force.
The figures were leaked on Wednesday, a day early, by Ursula von der Leyen, the labour minister, to coincide with the first anniversary in office of the centre-right coalition headed by Angela Merkel, German chancellor.
Breaching the 3m mark was “a great success for the people, the wage partners, Merkel government and the federal labour office”, Ms von der Leyen said ahead of the official publication of the figures.
The fall came amid two pieces of positive economic data for the eurozone, both out Thursday morning.
The European Central Bank said net demand for loans in Europe was positive for the first time in more than two years, driven by financing needs for inventory and working capital.
Borrowing by households also improved as more banks approved loans, signalling increased optimism about the economic situation and housing markets.
In Brussels, a closely watched survey gauging the eurozone’s economic mood showed that businesses were regaining optimism, particularly in the “core” countries led by Germany.
The European Commission’s monthly economic sentiment indicator rose 0.9 points to 104.1 in October, a 34-month high. Analysts had forecast a smaller increase following several months of rapid growth.
The eurozone figure concealed wide differences between the so-called “core” economies such as France and Germany, which rose, and the weaker “peripheral” group including Spain and Portugal, struggling with deep fiscal problems.
“The eurozone growth divergence is certainly not disappearing,” said Peter Vanden Houte, economist at ING, referring to indicators in the past year that have pointed to a divergent recovery in Europe.
The strong showing was partly down to improved expectations in the labour market, raising policymakers’ hopes that bullishness will now boost domestic demand – the weak link in the economic recovery.
Economists will be looking closely at unemployment figures on Friday. Joblessness remains at a record high of 10.1 per cent.
As with the wider economy, Germany has provided much of the optimism in the overall eurozone labour market situation this year.
Unemployment soared in Germany after unification between east and west in 1990, and hit a peak of more than 5m in 2005.
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