German unemployment fell for a third month in February, declining more than economists predicted, as companies became more confident in the recovery in Europe’s largest economy.
The number of people out of work decreased by a seasonally- adjusted 14,000 to 2.914 million, after falling a 28,000 the previous month, the Nuremberg-based Federal Labour Agency said today. Economists forecast a decline of 10,000, according to the median of 30 estimates in a Bloomberg News survey. The adjusted jobless rate was 6.8 per cent, unchanged from January and at a two-decade low.
The German economy beat economists’ expectations at the end of last year with 0.4 per cent growth that also bolstered the fragile recovery in the euro area, the country’s biggest trading partner. Business confidence as measured by the Ifo research institute rose to the highest level in 2 1/2 years in February, consumer sentiment is set to rise to a seven-year high in March, and the Bundesbank predicts growth will accelerate this quarter.
“The German labour market remains robust and it benefits from the recent pick up in activity,” said Annalisa Piazza, senior fixed-income strategist at Newedge Group in London. “The labour market is set to remain a supportive factor for consumption even if employment growth doesn’t accelerate considerably near term”
Domestic Demand
The European Commission raised its growth forecasts for Germany this week, citing rising demand at home. The economy will expand 1.8 per cent in 2014 and 2 per cent in 2015, it predicted. That’s 0.1 percentage point higher for both years than projected in November.
Joblessness fell by 8,000 in west Germany and 6,000 in the eastern part, the labour -agency report showed.
Unemployment in Germany is less than half that in the single-currency region, where the rate remained at a near-record 12 per cent in December. A measure of German joblessness comparable with other euro-area countries stood at 5.1 per cent in December, the second-lowest after Austria, while it was 25.8 per cent in Spain.
“We are very optimistic for the German labour market,” said Matthias Thiel, an economist at M.M. Warburg & Co. in Hamburg. “We expect the unemployment rate to decline further since Germany’s economy is going to have a good year in 2014.”
HeidelbergCement AG, the world’s third-largest maker of cement, cut 750 jobs in North America and Europe in 2013 in a profit-improvement program. At the same time, BASF SE, the world’s largest chemical company, posted fourth-quarter profit that beat analyst estimates on Feb. 25.
German growth in the fourth quarter was supported by surging exports and increasing investment, while private consumption and domestic demand declined. That highlights the economy is still vulnerable to headwinds from developments in the rest of the 18-nation region. German manufacturing probably slowed in March and a gauge of investor sentiment declined in February for a second month.
BLOOMBERG
