German labour market shows signs of improvement again

The number of unemployed in Germany in September is expected to have decreased by 5,000, following a decline of 7,000 in July. Following the strong declines in unemployment at the start of the year, the labour market has slowed down significantly, as concerns over Greece and China grew. 

More recently, however, survey indicators suggest that the job prospects have picked up again after the summer. This may seem surprising given the market turbulence over China recently, but is also a sign that the German economy is becoming more dependent on domestic factors, a trend we think will continue for some time. 

The rise in vacancies in the country has also not slowed down at all, standing at 574 thousand in August, suggesting that the German labour market is in a robust shape to handle the additional pressures coming from increasing migration flows. While data remains uncertain, many count on a significant increase in the labour force as of next year, topping over 100,000 people. If sustained, this could have implications on the expected decline in unemployment as well as wages, possibly allowing Germany to grow faster before encountering wage and inflation pressures, says Societe Generale.