German Unemployment Probably Fell to 15-Year Low in December

German Unemployment Probably Fell to 15-Year Low in December


Jan. 3 (Bloomberg) -- German unemployment probably fell to the lowest in almost 15 years in December as companies hired workers to process export-led orders, shrugging off signs that economic growth is slowing, a survey of economists showed.

The number of people out of work fell by 35,000, when adjusted for seasonal swings, according to the median of 27 forecasts in a Bloomberg News survey. The decline would take the jobless rate to 8.5 percent, the lowest since April 1993. The Federal Labor Agency will publish the figures at 9:55 a.m. in Nuremberg today.

``Companies have no real inclination to stop hiring although job creation has already peaked,'' said Lothar Hessler, an economist at HSBC Trinkaus & Burkhardt AG in Dusseldorf. ``Order books are still pretty full, which is good news for jobseekers.''

Nineteen of 29 German companies that participated in a Bloomberg News survey last month said they planned to hire staff this year even as their spending power is eroded by rising energy and raw-material costs. Lufthansa AG said Jan. 1 it plans to take on 4,300 employees in Germany, and Audi AG, Volkswagen AG's luxury brand, said yesterday it will hire 800 academics.

Factory orders rose more than expected in October, led by a surge in foreign sales of goods such as factory machinery. Germany topped the U.S. and the European Union on competitiveness, German newspaper Handelsblatt said yesterday, citing a survey by Droege & Comp. institute.

These factors helped the number of workers liable to pay social security premiums rise by 649,000 last year to about 39.7 million, the highest level since reunification in 1990, the Federal Statistics Office said yesterday.

Mixed Signals

Declining unemployment in Germany underlines the mixed signals coming from Europe's biggest economy as it copes with the euro's appreciation against the U.S. dollar, a 62 percent increase in the price of oil in the past year and slowing global growth.

Chancellor Angela Merkel said in her New Year's address Dec. 31 that the economy faces ``big'' global risks after two years of expanding growth.

German business confidence fell to the lowest in almost two years in December and investors were the most pessimistic since January 1993. Retail sales fell for a third straight month, the Bloomberg retail purchasing managers index showed last week.

Accelerating inflation has also swollen labor union wage demands and may restrict room for the European Central Bank to help the economy by cutting the benchmark interest rate from a six-year high of 4 percent. President Jean-Claude Trichet said Dec. 19 the 15-nation euro economy faces a ``more protracted'' period of elevated inflation than previously expected.

BLOOMBERG