Companies evidently view the soft patch in the economy as temporary. Company surveys show that business expectations have been picking up markedly for several months now. In addition, according to the Ifo Instutute, industrial capacity utilization already rose again at the beginning of 2013 (3-month comparison). This suggests that a pickup on the labor market could possibly set in earlier than forecast to date. The first rise for seven months in the Federal Labor Agency’s vacancies index, which acts as a leading indicator for labor demand, and the drop in notifications of forthcoming short-time work in the last two months support this view.
This boosts the prospects that average unemployment in 2013 will fall for the fourth year running, contrary to earlier expectations. However, as things stand, the drop is likely to be very small, at around 10,000 to 2.85m.