German labour market could lose some steam in February

German labour market could lose some steam in February

German labour market has been surprising on the upside for the last six months. Given the negative headwinds stemming from external demand, we could see some steam off the German labour market in February.

The PMI employment indicator weakened significantly in February, signalling that companies are becoming cautious, but other surveys still signal strong domestic activity. Given the underlying strength of the labour market, the survey indicators could stabilise at higher levels.

"The unemployment rate is expected to remain at a record low of 6.2% and possibly decline further in the coming months, but with a weaker employment outlook, it should stabilise thereafter. We see the number of unemployed decreasing by 15,000, following January's 20,000." said Societe Generale in a report.