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German Job Market Braves Ukraine Crisis

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I'm not a popular guy on workdays but I really like my job.
  • Why it matters

    Why it matters

    The robust jobs outlook is good for Germany’s Federal Employment Agency, which could turn a projected budget deficit into a big surplus.

  • Facts

    Facts

    • Germany’s number of unemployed rose slightly in August, to about 2.9 million, due in part to summer vacations.
    • In August, employment agencies reported 515,000 job openings.
    • Economists now consider a €1 billion, or $1.3 billion surplus as realistic for the German Federal Employment Agency.
  • Audio

    Audio

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Although the number of unemployed rose 30,000 in August to 2.9 million, the outlook for the German job market remains good, said Frank-Jürgen Weise, head of the German Federal Employment Agency.

The slight jobless rise in his agency’s monthly report was due to seasonal factors. Summer vacations started later this year and continued into August, he said. Seasonally adjusted, the number of unemployed was up by about 2,000.

According to the federal employment agency, the Ukraine crisis has not yet hurt the job market.  Overall, Mr. Weise said, employment is continuing to grow in Germany “and that is still a very good sign.”

In the first seven months of 2014, the economy added 260,000 new jobs – in particular, jobs with mandatory social security insurance contributions. The number in June was about 550,000 higher than in the previous year. Revised data from previous months showed that already in April, the total number of insurance-contributing jobs surpassed 30 million.

The Ukraine crisis has not yet hurt the job market.

Furthermore, the demand for employees remains high. In August, employment agencies reported 515,000 job openings. Especially sought after are metalworkers, machinists and automotive-technology workers, as well as those in transportation and logistics. According to a business climate survey by Ifo, a respected economic group, German firms in August slightly increased their hiring plans for the next three months. Above all, service providers planned new jobs.

The robust job market is also good for the Federal Employment Agency’s budget. The deficit for the first eight months might only be about €170 million, or $223 million, Handelsblatt has learned. Internal estimates for the end of August originally expected a €1.1 billion deficit.

In spring, the employment bureau revised its budget forecast to a €100 million surplus. Economists now consider a €1 billion surplus as realistic. However, the numbers might change this fall based on new economic forecasts by the German government, Mr. Weise said.

Rolf Schneider, an economist with Allianz, sees no signs now of a downturn in the job market.

“If the last economic slowdown were very pronounced, there already would have been visible skid marks in the job market,” he said. The possibility of the German economy “growing moderately” in the second half of the year would only add to the jobs outlook, said Mr. Schneider.

This article was translated by Anna Park Kim. Greg Ring also contributed. To reach the author: schrinner@handelsblatt.com

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