Unemployment Rate Drops And Business Confidence Increases In Germany

06 Feb 2014

As organizations grow more confident in the economy of Germany, the German unemployment has dropped more than forecast in January 2014.

The Federal Labor Agency which is based in Nuremberg said that the number of unemployed Germans reduced by a seasonally-adjusted 28,000 to 2.93 million. As per the average of 34 estimates in a Bloomberg News survey, economists predicted that there will be a drop of 5,000. Unexpectedly, the adjusted German unemployment rate decreased to 6.8%, which is unchanged from a revised figure of December and is the lowest rate in the past 20 years.

According to the prediction of Bundesbank, in the coming months, the economy of Germany will expand ‘strongly’, and will support the still-delicate recovery in the remaining nations in the Euro Zone. Germany’s IFO index of business confidence is at the topmost level in 2 1/2 years as businesses profit from strengthening foreign trade and domestic demand.

A fixed-income strategist at London’s Newedge Group, Annalisa Piazza said that in the future, German businesses may expect growing profitability, improving with a few new hirings. Piazza added that Part of the labor market improvement is because of the positive effects of the structural reforms of Germany which were implemented much before of the crisis. These reforms have helped create a more flexible and resilient labor market that is not much affected by periodic swings.