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Carsten Brzeski, chief economist at ING, points out that the German labour market ended 2019 with no problem as the unemployment increased by 47,200 in December, bringing the total number of people out of a job to 2.227 million.

Key Quotes

“Its the highest level since August but still the second lowest December reading since German reunification. The seasonally-adjusted unemployment rate remained unchanged at 5.0%.”

“At least at the headline level, the German labour market seems to be immune to the knock-on effects of the ongoing trade conflict, the global economic slowdown and disruption in the automotive sector.”

“However, under the surface of these strong headline numbers, there are some cracks in what currently is Germany’s strongest anti-recession insurance: unemployment has actually increased in five regional states; employment in the manufacturing sector has started to drop and recruitment plans have been on a downward trend since the end of 2017.”

“Also today, the first estimate for December inflation based on several regional state data was released, showing an acceleration in headline inflation on the back of higher prices for food, clothing and leisure. At the same time, the negative base effect from lower energy prices almost petered out entirely in December. Headline inflation came in at 1.5% year-on-year, from 1.2% YoY in November; the highest level since June 2019.”