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German jobless rate falls

May 31, 2012

Over 100,000 more Germans have been able to find jobs in May, the employment office says. But analysts warn the drop in the jobless rate has not been substantial enough - and could reverse soon.

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Opel workers assembling Insignia cars
Image: AP

Unemployment in Germany decreased by 0.3 percent in May, the Nuremberg-based Federal Employment Agency (BA) reported on Thursday.

It said 108,000 more people found work across the country month-on-month, that's 105,000 more than in May of last year. The jobless rate now stands at 6.7 percent, with 2.86 million people still officially registered as unemployed.

"By and large, the domestic job market has continued to develop favorably," BA chief Frank-Jürgen Weise said in a statement on Thursday. "But the positive trend that we've seen for months is losing momentum."

Cautious outlook

Weise noted the April-to-May employment increases in previous years were higher than in 2012, and economic pundits agreed that the boom period for the German labor market may soon grind to a halt.

"Recent developments tell us that while the job market is still intact, things have begun to move forward very slowly," Commerzbank economist Eckart Tuchtfeld said. "I wouldn't rule out a setback in the months to come."

Analysts were in agreement that the situation on the domestic labor market will depend largely on how fast Europe will be able to get on top of its debt crisis. Unresolved financial problems in Greece, Spain, Portugal and other eurozone nations may worsen Germany's export opportunities to that area further and with it may destroy jobs on the home front.

hg/sms (Reuters, dpa)