German Unemployment Drops to 1.5 Year Low in February

German unemployment dropped in February to its lowest level in nearly 1-1/2 years, boding well for domestic demand, which the government hopes will help drive growth this year.

The number of people out of work in Europe’s largest economy decreased by 14,000 to 2.914 million, data from the Labour Office showed. That meant there were fewer unemployed people in Germany than at any time since September 2012.

The mid-range forecast in a Reuters poll had been for a drop of 10,000. It was the third consecutive monthly drop in joblessness.

“For 2014, a tightening German labour market raises our expectations that wages are also going to increase, which should feed through to higher consumption,” said Christian Schulz at Berenberg Bank.

“(That) should allow Germany to rely on domestic demand for growth in 2014 as exports may face some pressure due to the emerging market crisis,” he added.

Separate data from the Federal Statistics Office on Thursday showed employment climbing to a record high of almost 42 million. That, along with moderate inflation, an expected rise in wages and low interest rates, should encourage traditionally thrifty Germans to spend rather than save.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza