German unemployment extends drop in sign of robust economy

Bloomberg

German joblessness extended its decline, underscoring the strength of the labour market as Europe’s largest economy seeks to absorb a wave of refugees.
The number of people out of work fell by a seasonally adjusted 16,000 to 2.706 million in April, data from the Federal Labour Agency in Nuremberg showed on Thursday.
That’s the seventh consecutive drop, and compares. The jobless rate stayed at 6.2 %, the lowest level since German reunification.
The reading signals that German economic growth is strong enough to prompt companies to tap into a pool of potential workers that is rising after the country admitted more than 1 million migrants in 2015.
The labor market has been a cornerstone of the nation’s recovery, supporting domestic demand as exports waver in the face of a global slowdown.
“Despite the recent drop in exports to China and other emerging markets, Germany continues to create ever more jobs,” Holger Schmieding, chief economist at Berenberg Bank, said in an e-mailed note. “Domestic demand looks set to remain a pillar of strength at the core of Europe, helping the euro zone to leave its current soft patch behind and return to trend growth of around 1.6 percent by mid-2016.”

Price Growth
That should come as good news for the European Central Bank as it seeks to stoke price growth in the euro area with a mix of low rates, bond purchases and cheap loans. A separate report on Thursday showed economic confidence in the region rose in April, snapping three months of declines.
The number of people out of work dropped by 7,000 in western Germany and by 9,000 in the eastern part of the country, the report showed. German companies are again planning to recruit more staff after three consecutive months of decline with manufacturing and services leading the recovery, an employment gauge by the Munich-based Ifo institute showed on Wednesday.
The outlook could yet deteriorate. Germany’s manufacturing and services sectors cooled slightly in April, leaving the economy in a phase of “unspectacular” growth, Markit said last week after publishing its purchasing managers
survey.
The Bundesbank sees slowing momentum in the economy this quarter after a strong expansion in the first three months of the year.

Non-Europeans
The report from the Labor Agency also showed that non-Europeans from asylum-seeking countries were the only group with rising joblessness in April, underscoring the challenge of migration for the labor market.
The number out of work rose 10.7 percent from the prior month and 89.8 percent from a year earlier, even as Germans saw unemployment decline.
The impact of migration on unemployment should become more pronounced later this year.
That’s because asylum-seekers can’t work for their first three months, and face restrictions afterwards, meaning it could take them some time to work their way into the system to obtain unemployment
status.
“As the labor force increases, unemployment will probably edge up modestly” by as much as 200,000 in the second half of 2016 “despite ongoing gains in employment,” according to
Schmieding.
Euro-Area Economic Confidence Rebounded in April From 1-Year Low
Economic confidence in the euro area rose in April, snapping three months of declines that had sent the index to the lowest in more than a year.
A gauge of executive and consumer confidence increased to 103.9 from 103.0 in February, the European Commission in Brussels said on Thursday. Economists had forecast a gain to 103.4, according to a Bloomberg survey.
The pick up in the sentiment indicator follows weaker readings at the start of the year, when China-led concerns about emerging market growth sent ructions through global markets. While European Central Bank President Mario Draghi has said there are still downside risks to the outlook for the euro region, data on Friday is projected to show a 12th straight quarterly expansion in the first three months of the year.
Even with consistent economic growth, global deflationary pressures are having an impact. Prices in the 19-nation euro area probably stagnated this month on a annual basis, a factor that’s forced the ECB to keep ramping up stimulus.
At the same time, average unemployment in the region remains above 10 percent and is more than twice that in some countries. Euro-area readings for consumer prices and joblessness also are scheduled for Friday.
Sentiment among consumers increased to minus 9.3 from minus 9.7 the previous month, Thursday’s report showed, while services, industrial and construction also improved.