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German consumer confidence rises, unemployment remains low despite European financial crisis

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(Globalpost/GlobalPost)

BERLIN - Germany's unemployment rate held steady in April, the Federal Labor Agency reported Tuesday, while a survey showed German consumers' mood remained robust — two new signs that Europe's largest economy is continuing to weather the European financial crisis.

The labour office reported the jobless rate remained unchanged at 6.9 per cent, just off its two-decade low, despite a slight rise of 4,000 people seeking jobs when adjusted for seasonal factors.

The unadjusted rate dropped from 7.3 per cent in March to 7.1 per cent in April, with the actual number of Germans seeking work falling by 78,000 to 3.02 million.

Labour Agency head Frank-Juergen Weise said that although the figures showed no major improvement, the "German labour market is overall in good shape."

The 17-nation Eurozone, meantime, is struggling with an overall unemployment rate of about 12 per cent.

Germany has so far managed to avoid slipping into recession like several other European countries. It posted a decline in fourth-quarter growth in 2012 but most economists expect a return to growth in the first quarter of 2013.

Preliminary growth figures won't be published until May 15. Two straight quarters of falling output is one common definition of a recession.

In another positive sign the forward-looking GfK consumer climate index released Tuesday rose to 6.2 for May — its highest level in nearly six years, and slightly up from a revised 6.0 in April. GfK reported consumers' income expectations and willingness to buy were both up, though their view on how the overall economic situation will develop in the next year dropped slightly.

ING economist Carsten Brzeski said the GfK numbers "confirm that the often written-off German consumers have become an important, though not strong, growth driver."

"All ingredients are in place to see a continuation of solid consumption," Brzeski said. "The labour market remains stable. Contrary to the rest of the Eurozone, German unemployment has hardly increased —yet— and remains close to its record lows."

GfK cautioned, however, that even with the good figures, consumption will suffer if the debt crisis worsens.

"In view of the stable labour market figures and rising incomes, consumers do not appear to consider their own economic situation to be at risk," the agency said. "However, they are not quite so optimistic when it comes to economic development in general."

http://www.globalpost.com/dispatch/news/the-canadian-press/130430/survey-german-consumer-confidence-rises-despite-european-fin