The number of unemployed in Germany rose slightly in November, rising by 1,000 to 2.973 million, well below market expectations of an additional 5,000. The adjusted unemployment rate remained at 6.3%, avoiding the sharp decline feared after the unemployment rate passed the symbolic 3 million mark in August. However, since the low of 2.2 million in May 2022, the overall trend has continued to show a steady increase in unemployment.
Despite the rate stability, fundamental labor market signals remain weak. Labor office chief Andrea Nahles stressed that the number of people in work is now flat and labor demand is bleak, with just 624,000 job vacancies in November, 44,000 fewer than a year ago. Labor Minister Baerbel Bas warned that companies were still grappling with major economic challenges, while the Ifo survey showed hiring plans tightening and the employment barometer falling to its lowest level in more than five years.
Deutsche Bank economist Marc Schattenberg stressed that the overall picture remained mixed and varied widely across sectors. The German Labor Office expects unemployment to rise above 3 million early next year. At the same time, inflation in several major German states remained unchanged in November, at 2.2–2.3%, indicating stable price pressures at the regional level.
Overall, inflation is expected to rise slightly to around 2.4% from 2.3%, still close to the ECB’s target, while eurozone inflation as a whole is expected to remain around 2.1%. The ECB recently kept interest rates on hold at 2% and insisted that policy was at a “good level” as economic risks appear to be receding.
Analysts expect retail sales growth to slow significantly throughout 2025 after a surge in late 2024, while an Ifo survey showed one in four retailers expected a weak Christmas season. With the economy expected to grow by just around 0.2% in 2025 after two years of contraction, Germany's recovery is expected to remain slow and fragile.
