Weather affects German joblessness and inflation

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Weather affects German joblessness and inflation

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The number of Germans out of work jumped more than forecast in May – adjusted for seasonal factors – but that was due partly to bad weather.

The increase was 21,000 taking the total to 2.93 million. That was well above economists estimates. It was also the fourth straight monthly increase.

The good news for Chancellor Angela Merkel, ahead of September’s election, is that the unadjusted jobless rate – which is the politically important headline figure in Germany – fell back below the three million mark for the first time since December.

The adjusted unemployment rate also remained low at 6.8 percent of the workforce close to its lowest level since Germany reunited more than two decades ago.


Last week a flash purchasing managers’ survey showed staffing levels fell across the private sector in May for the first time since January.

Major German companies are slashing jobs, with steel distributor Kloeckner & Co increasing planned job cuts to more than 2,000, or 17 percent of the workforce, and chemical maker BASF planning to cut 500 jobs by 2015.

However, many Germans will take home more pay this year and next after securing hefty wage rises which should boost domestic demand. The government hopes this will offset weaker foreign trade this year.

Inflation up, but still tame

Unusually cold and wet weather forcing up the price of food sharply may also have been a factor in higher inflation in Germany.

The Statistics Office put forward that theory as it announced the annual rate in May was 1.5 percent, up from April’s 1.2 percent.

That is still comfortably below the European Central Bank’s target of close to but below 2.0 percent for the eurozone as a whole.