■ In January, the jobless rate was unchanged at 6.8%, after December data was revised downward from 6.9% to 6.8%. It is thus standing an inch above the twenty-year low of May 2012 at 6.7%
■ At 2.927 million, unemployment decreased by 28K, the largest fall since September 2011, down for the second month in a row. We expected such a decrease, though not as large, as surveys were indicating unemployment should have fallen in January. For instance the Flash composite PMI employment index remained above the 50- threshold which separates contraction from expansion for the third consecutive month in January though declining from 52.4 in December to 50.8. In addition, employment (published with onemonth lag) increased over the month in December, up 24K. Although it grew markedly, it still increased at a slower pace (0.6% y/y in December compared to 0.9% a year ago) than twelve months ago.
■ All in all, the German labour market has weathered the past global economic slowdown pretty well and should benefit further from the current recovery. In turn, this should back household confidence and boost their real disposable income. According to GfK consumer confidence released yesterday, the mood of German consumers was notably buoyant at the start of 2014. Household confidence index was up from 7.4 in December to a revised 7.7 in January, the highest level since August 2007 and is forecast at 8.2 in February. Consumers consider that German economic upswing is gaining momentum and that their income should increase. Indeed the grand coalition is to implement a string of measures in favour of households power purchase (introduction of a minimum wage, full retirement from the age of 63 for those who have made contributions for a total of 45 years etc...). Rising economic and income expectations are also having an impact on consumers’ willingness to buy. The relative index overshot its seven-year high recorded in December 2013 up to 50 points in January. A higher value was last recorded shortly before the VAT increase in January 2007.
BY Caroline NEWHOUSE
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