The unemployment rate is at 5.5%

According to data released Tuesday by the Labor Office, Germany’s unemployment rate held steady in January. According to the Federal Labor Office, the number of unemployed people decreased by 15,000 when seasonally adjusted. Reuters polled analysts and they predicted a 5,000 increase in that number.

Seasonally adjusted, there were 2.5 million fewer unemployed in Germany at the beginning of the year. According to Melanie Debono, senior Europe economist at Pantheon Macroeconomics, this is a five-month low, partially reversing some of the increase since June 2022, when Ukrainian refugees were eligible for unemployment benefits.

The seasonally adjusted unemployment rate held at 5.5% from the previous month. Carsten Brzeski, global head of macro at ING, noted that the labor market has played an important role in the resilience of the economy over the past five years. According to Brzeski, the German job market has become “virtually bulletproof” due to fiscal stimulus, furlough programs and demographic change.

The president of the Federal Labor Office, Andrea Nahles, stated that the labor market remained stable at the beginning of the year. However, she stressed that geopolitical and economic uncertainty still has an impact.

In seasonally adjusted, unadjusted numbers, the number of unemployed people in Germany rose to 2.6 million in January.

According to labor statistics, in January there were 162,000 more unemployed than in December and 154,000 more than a year earlier. According to data published this Monday by the statistics office, Germany’s gross domestic product fell by 0.2% in the last quarter of 2022.

Pantheon Macroeconomics predicted that over the next few months, there would be a small increase in the unemployment rate due to declining labor demand, rising commodity prices, and further tightening of business lending requirements by governments. banks.

German economy: Eurozone rates of return are declining

A drop in eurozone rates was recorded on Tuesday as investors braced for a 50 basis point rate hike and potentially more aggressive direction at the European Central Bank’s monetary policy meeting, which came after it economic data will revive concerns about a severe economic slowdown.

According to Joost van Leenders, senior investment strategist at Van Lanschot Kempen, economic indicators from France and Germany indicating a recession in the European economy impact bond prices. Although there is still some uncertainty, the market expects the ECB to raise rates by 50 basis points twice for March.

The benchmark 10-year government bond yield for the euro area, DE10YT=RR, fell 3.5 basis points (bp) to 2.28%. On January 18 it reached its lowest level in a month, 1.97%, while on December 30 it reached its highest level since July 2011, 2.57%.

According to Holger Schmieding, an economist at Berenberg, “ECB President Christine Lagarde will likely reject market expectations that the bank will start cutting rates again later this year or early 2024.”

The deposit rate is set to peak at 3.5% this summer, according to ECB euro short-term rate (ESTR) forwards. Before Spain’s inflation data was announced on Monday, traders predicted interest rates would peak at about 3.3%.

Unsecured euro overnight wholesale borrowing costs for euro area banks are reflected in the ECB’s ESTR. Typically, it is 10 bps or so less than the deposit rate. It was higher than the 4.7% forecast by the Reuters poll of analysts, coming in at 5.8% compared with 5.5% in December. It was 7.0% in January, compared to 6.7% in December, and on Wednesday, the euro area will publish its data.

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