Germany

Robust labor market

The strong upturn in the German labor market continues unabated. Seasonally adjusted, the number of unemployed fell by 22,000 in February compared with the previous month. Since September 2017, labor market dynamics have noticeably increased. Between September 2017 and February 2018, the cumulative number of unemployed fell by 134,000. By way of comparison: in the previous six-month period, the decline amounted to only 66,000.

Employment also continues to grow strongly. In January, the number of persons employed was up by 1.4% on a year earlier. The rise in employment continues to be due solely to the increase in jobs liable to social insurance. It recorded an increase of 2.2% in December 2017. With an increase of 4.2%, Berlin is the leader in this regard, followed by Bavaria and Baden-Wurttemberg with +2.5% and +2.4% respectively. Employment growth spans most sectors. It is particularly pronounced in areas such as qualified corporate service providers, care and social welfare, trade and transport.

We interpret the recent setback in sentiment surveys such as the ifo Business Climate Index as a normalization, which was already overdue in view of increasing euphoria. In our view, this is not the beginning of an economic downturn. For the rest of the year, we anticipate a sustained upward trend in the labor market. However, employment growth is likely to slow down somewhat as a result of a slower expansion of labour supply and increasing bottlenecks in various sectors.

We expect the average number of employees to increase by almost 600,000 in 2018, compared with more than 650,000 last year. The decline in the number of unemployed, which amounted to almost 160,000 in 2017, is expected to continue at about the same magnitude in 2018.  

Contact

Gregor Eder

Allianz SE
Phone: +49 69 24431 3358

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