Germany’s labor market likely eased slightly in February on weak external demand, financial market volatility

The labor market in Germany is likely to have eased slightly in February due to the negative headwinds from weak external demand and financial market volatility. However, it is likely to be only a slow easing. The number of unemployed people in February is expected to have decreased by 15,000, after January's 20,000. The February's PMI employment indicator weakened considerably, hinting that firms in Germany are becoming wary. However, other surveys still hint at strong domestic activity.

The jobless rate is likely to be at a record low level of 6.2% and might probably fall further in the coming months. However, it is likely to stabilise after that due to a weaker outlook for employment. With the strong labor market that is mainly driven by domestic factors, there is a high possibility that survey indicators stabilise at a higher rate than currently.