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Wednesday, 5 September, 2001, 08:44 GMT 09:44 UK
German unemployment falls
Exterior of German Department of Social Security
The jobless queues are getting shorter in Germany
German unemployment fell in August for the first time since December last year, according to official figures.


The numbers are a bit better than we had expected, but I would warn against treating it as a sign of a trend change in the job market

Harald Joerg
Dresdner Bank

The August unemployment figure fell by a seasonally-adjusted 2,000 in August, the Federal Labour Office reported.

Economists had expected a rise of 17,500.

A rise in employment in the east of the country, where 7,000 new jobs were created, lifted the national average and disguised a rise in unemployment in the west where 5,000 jobs were lost in August.

Rate unchanged

The jobless rate remained unchanged at 9.2% while in absolute terms the number of people on the dole fell from 3.799 million to 3.789 million.

That is a non-seasonally adjusted fall in the number of people out of work of about 9,900 in August compared with July.

But compared to a year earlier there was a rise in unemployment, with 8,100 more Germans out of work.

Bouncing back

Observers interpreting the figures disagree on what they mean.

"The government is likely to use August's figures to argue the downturn in the economy is bottoming out," said BBC correspondent Greg Morsbach.

But others disagree, suggesting that Europe's largest economy is in worse shape than the latest jobless figures suggest.

"We are quite optimistic that we are now in the process of bottoming out...[but] we would be surprised if we saw a lagging indicator like the labour market to be bottoming out," Deutsche Bank economist Ulrich Beckmann told the BBC's World Business Report.

"The numbers clearly reflect a distortion," he added.

His view is that it is unlikely that the unemployment situation will improve before spring of next year.

"The numbers are a bit better than we had expected, but I would warn against treating it as a sign of a trend change in the job market," said Dresdner Bank economist Harald Joerg.

Critics point out that several major German companies, including the electronics giant Siemens and the chemicals companies Bayer and BASF, have announced that they are firing thousands of workers - and these sackings have not yet been included in the figures.

Political motives

"In the coming months we should pay close attention to government programmes, as elections approach it is going to play an increasing role," said Commerzbank economist Christoph Hausen.

He suspects the government will boosting job creation in East Germany to improve the national average ahead of next autumn's election.

"Before the last election these measures had been used extensively and I expect this to happen again now," he said.

"A drop in east German unemployment cannot be explained by the overall economic development".

 WATCH/LISTEN
 ON THIS STORY
Deutsche Bank's Ulrich Beckmann
"The numbers clearly reflect a distortion"
The BBC's Greg Morsbach
"Evidence suggests the downturn may be bottoming out"
See also:

16 Aug 01 | Business
German economy grinds to a halt
07 Aug 01 | Business
More gloom for German jobs
03 Apr 01 | Business
Germany's unemployment dilemma
19 Mar 01 | Business
Germany forms 'mammoth' trade union
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