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Germany unemployment rises while confidence improves in euro zone
Thu, Jan 28 2010, 10:48 GMT
by ecPulse.com analysis team
After the progress madefrom most of the sectors in the euro zone, boosted confidence levels, while attention is now directed towards the employment sector thatwhich was heavily brutalized by the economic recession that had ravaged economies around the world.
We clearly continue to see high levels of unemployment in the euro zone, while today’s data signals that the employment sector in the largest economy in the euro zone, Germany, remains fragile therefore affecting confidence levels one way or another.
Germany’s unemployment rate for the month of Januarywitnessed arise by 8.2%, inline with expectations from the prior reading of 8.1%. Also released was unemployment change, which hit six thousand after the former fall of 3 thousand as markets were projecting a rise of 15 thousand.
The data suggests the persistent existence of weakness and volatility in the German employment sector, especially as wewitnessed unemployment rising after falling in the past couple of times, after posting 8.1% in December.
The great performance witnessed in Germany supported the 16-nation region significantly, as Germany expanded in the second quarter by 0.4% while in the third quarter it stepped out of recession posting growth of 0.7%. Also, as growth was witnessed ithelped reduce the levels of deflation in the euro zone, as demand improved.
In addition, the improvement in Germany was from the dominate sectors expanding, yet we expect to see a rise in unemployment rates as yesterday we saw consumer price index fall more than projections, which meant that demand and spending remain impaired from the current economic scenario.
Next is the high rate of unemployment in Germany,where it hasalso been rising in the euro zoneand had reachedits highest in 11 years in December by 10.0%. Meanwhile, the European Central Bank is already projecting that unemployment rates will continue gaining,which is of no surprise to us.
As previously mentioned, the confidence levels in the nation are closely tied with the employment sector, as companies lay off a large number of staff in order to reduce expenses; leading to declining levels of confidence in the nation which therefore weighs on spending and general price levels.
However, lately confidence levels have been rising after the progress that has been taking place in the euro zone, especially after the ECB applying 60 billion euro dominated bonds towards stimulating economic conditions and supporting price levels.
Also released today were the confidence indicators from the euro zone, while most of the data was better than previous readings, which reflect the improved levels of confidence in the euro zone; except for the consumer confidence indicator, which stood unchanged in January at -16. As stated, the business climate indicator for January rose to -1.12 from the revised prior reading of -1.30 from -1.22, which was worse than the projected -1.10.
Some of the confidence indicators are still negative and thus reflecting the weaknesses, which aredue tohigh unemployment and thewidened budget deficit that is weighing on growth levels aswell as instability in the banking system.