Despite the war in Ukraine, high inflation and the sharp increase in energy costs, the German labor market remains robust.

As the Federal Employment Agency announced on Wednesday, the number of unemployed fell by 43,000 to 2.442 million in October.

The unemployment rate fell by 0.1 percentage points to 5.3 percent.

Britta Beeger

Editor in business and responsible for "The Lounge".

  • Follow I follow

However, the difficult economic situation is also leaving its mark on the labor market.

The decline in unemployment can be attributed to the autumn revival that is usual at this time of year: Many young people start an apprenticeship or study after the summer break, and at the same time trades, construction and service providers have more to do again.

If you factor out these typical seasonal fluctuations, there is – as in the previous month – a slight increase in unemployment: by 8,000.

Overall, the labor market is still robust, said the CEO of the Federal Employment Agency, Andrea Nahles: "However, the consequences of the economic uncertainties are visible." Nahles pointed out that more companies were preparing for possible short-time work and reduced their demand for new staff.

More workers than ever before

Leading indicators suggest that the situation on the German labor market could deteriorate further in the coming months.

The labor market barometer of the Nuremberg Institute for Labor Market and Vocational Research, which is part of the Federal Employment Agency, fell in October for the sixth time in a row.

The barometer is based on a monthly survey of all local employment agencies.

They assume that employment will continue to rise in the coming months, but not as strongly as before.

At the same time, seasonally adjusted unemployment is likely to continue to rise.

The employment barometer of the Munich Ifo Institute also indicates that companies in Germany are reluctant to hire new staff in view of the looming recession.

It is based on a monthly survey of around 9,000 companies and in October fell to its lowest level since April 2021, when the corona pandemic was weighing heavily on the economy.

Reports of new hires and layoffs are currently roughly balanced.

"Caution is returning to the labor market," said Klaus Wohlrabe, head of the Ifo surveys.

For example, no increase in employment is currently to be expected in industry.

Despite the difficult economic situation, the number of people in employment reached an all-time high when the autumn recovery began in September.

It climbed by 239,000 to 45.6 million, as the Federal Statistical Office announced on Wednesday.

The increase is slightly below the September average for the three pre-crisis years 2017 to 2019, but the previous high for employees residing in Germany from November 2019 was broken.

However, if you exclude the usual seasonal fluctuations, there is a slight decline compared to the previous month of August.