German labour market remains resilient despite partial lockdown

The government has since March made billions of euros available in short-time work schemes, also known as Kurzarbeit, which have shielded the labour market from the brunt of the pandemic. In September, the latest month for which data were available, the number of people on short-time work fell to 2.22 million in September.

German unemployment fell further in November despite a partial lockdown to contain a second wave of coronavirus infections in Europe's largest economy, data showed on Tuesday. The labour office said the number of people out of work decreased by 39,000 in seasonally adjusted terms to 2.817 million. A Reuters poll had forecast a rise of 8,000.

The unemployment rate edged down unexpectedly to 6.1% from 6.2% in the previous month. But a gloomy consumer sentiment survey released by the GfK institute last week suggests the resilient labour market will not automatically translate into higher household spending at the end of the year.

Economic institutes expect Germany's gross domestic product to shrink by about 1% in the fourth quarter after a stronger-than-expected 8.5% rebound in the third and an unprecedented 9.8% plunge in the second quarter. "A significant and more permanent economic recovery can only be expected from the second quarter of 2021, when more favourable weather conditions and the prospect of a (COVID-19) vaccine will make life easier for large parts of the population," said Joerg Zeuner, chief economist at Union Investment.

Germany last week extended until Dec. 20 a partial lockdown which has forced bars, restaurants, hotels and entertainment venues to close since Nov. 2. Shops and schools remain open. Labour Office head Detlef Scheele said the labour market had reacted to the restrictions, but fortunately not with an increase in layoffs.

"However, companies are again more reluctant to look for staff. And they put significantly more employees on short-time work in November," Scheele said. The government has since March made billions of euros available in short-time work schemes, also known as Kurzarbeit, which have shielded the labour market from the brunt of the pandemic.

In September, the latest month for which data were available, the number of people on short-time work fell to 2.22 million in September. This compared with a peak of nearly 6 million in April at the height of the pandemic. The data chimed with a survey released on Tuesday showing the November lockdown slowed growth in manufacturing, but export-oriented companies remained optimistic thanks to strong demand from abroad.

Separately, the Munich-based Ifo economic institute said its November business climate survey showed that 15% of companies felt their existence was threatened by the pandemic. That marked a decline from 21% in June. Travel agencies and tour operators felt particularly threatened, along with hotels and restaurants.

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