Daily Management Review

German Economy’s Record High Employment Data Kindles Hope


Amid global economic uncertainties, Germany depends on domestic demand to sane its economic performance for this year. What to the data tell us?

According to March data, in Germany the figure of unemployment reached a “new record low”, while the retail sales figure for the month of February climbed higher, whereby adding a boon to this year’s expectation of “private consumption” complimenting the growth of the largest economy among the European countries.
Traditionally, German economy was driven by export but given the “global slowdown” among the exporters, disputes over trades and uncertain Brexit situation, this year domestic demand alone is the sole growth driver expected in the country. In fact, Labour Department’s data revealed that the unemployment rate in Germany fell to 4.9% in March which was previously at 5%. The current figure marks the “lowest since German reunification in 1990”.
As per Reuters:
“The number of people out of work decreased by 7,000 to 2.231 million, seasonally-adjusted data showed. That compared with the forecast for a drop of 10,000”.
Retails sales figures are a “volatile indicator” although often “subject to revision”. However, a separate data showed that the retail sales figure of Germany for February increased by “0.9 percent”, creating baffling expectation of a 0.9% drop, while the increment figure on the year is of 4.7%.
Germans have seen encouraging signs amid employment figures touching record heights, the hefty hikes in payment, the “moderate inflation” as well as “low borrowing costs”; as a result, they have splashed their cash. However, GfK had come out with a survey in the beginning of this week which diluted the high spirit as it revealed that “consumer morale deteriorated unexpectedly” as we head into the month of April, which indicated that there is an inclination towards a drop in spending habits which might hit the “lowest level in more than two years”.
Furthermore, Reuters added:
“The economy narrowly avoided a recession last year and the Ifo institute earlier this month slashed its 2019 growth forecast for the German economy to 0.6 percent from 1.1 percent due to weaker foreign demand for industrial goods and increased headwinds for exporters”.