Recession hits German labour market
BERLIN: German unemployment rose a seasonally adjusted 58,000 in April from March, the government said on Thursday, as the recession put more and more people out of work in Europe's biggest economy.
The surprisingly large rise came a day after the government predicted that gross domestic product (GDP) would contract by six percent in 2009, making it one of the worst performing major economies worldwide.
"April's sharper than expected increase in German unemployment confirms that the recession is now taking a very heavy toll on the previously resilient labour market," analyst Jennifer McKeown at Capital Economics said.
The labour office said that the total unadjusted number of people out of work fell slightly to 3.58 million from 3.59 million the month before and that the unemployement rate was unchanged at 8.6 percent of the workforce.
However, the fall was much smaller than expected as the usual springtime boost to the labour market failed to materialise, the labour office said.
"Clearly, the government?s initially successful incentives for firms to keep workers on for shorter hours instead of cutting jobs have become less effective as the recession has deepened," McKeown said in a research note.
"With survey measures suggesting that firms intend to cut jobs even more aggressively in the coming months, rising unemployment threatens to offset the positive impact of falling inflation on consumer spending."
Germany has already put into place two stimulus packages worth around 80 billion euros (105 billion dollars) but was criticised both at home and abroad for being both too slow to act and too conservative.
Rising unemployment is expected to be a major issue in general elections on September 27 when Angela Merkel, Germany's conservative chancellor, runs for a second term.