German Jobless Rate Falls to 20-Month Low as Faster Growth Prompts
Hiring
European Economies: German Jobless Rate at 20-Mth Low (Update1) (Updates
with Bank of England rate decision in 11th paragraph, outlook for
Spanish GDP growth in 13th paragraph.)
Nuremberg, Germany, Aug. 6 (Bloomberg) -- Germany's jobless rate fell to
a 20-month low of 10.9 percent in July, the Bundesbank said, as faster
growth in Europe's biggest economy encouraged companies to hire.
Jobless rolls dropped by 37,000 according to seasonally adjusted
figures, the seventh consecutive decline, after falling a revised 52,000
in June. Without adjusting for seasonal shifts in the labor market,
joblessness rose by 59,410 people, as college terms ended and young
people joined the search for jobs.
The decline in joblessness from a postwar record in December reflects
increased investment by companies in Western Germany. In the East,
spending by Chancellor Helmut Kohl's government on job- creation
programs ahead of elections on Sept. 27 is seen as the main reason for
falling unemployment. ''In Western Germany, there are clear effects from
the improving economy,'' said Marco Kramer, an economist at Banque
Paribas. ''There we're seeing the impact of an economic recovery, not
just the result of a government that's trying to influence the
election.''
The July figures are the second-to-last set before Germany goes to the
polls on Sept. 27. Both Kohl's coalition government and the opposition
Social Democratic Party are eager to lure voters with pledges to cut
unemployment. Kohl's CDU party is trailing the SPD by 4 points, recent
opinion polls show.
The drop in German joblessness caused the dollar to fall against the
deutsche mark for a third day. The German currency rose to 1.7665 marks
per dollar from 1.7710 last yesterday.
Output drops
A separate report from the Economics Ministry showed German industrial
output unexpectedly falling 1.9 percent in June from May, a sign the 3.8
percent pace of growth of the first quarter cooled off in the second
three months.
Evidence is mounting the economic slump in Southeast Asia is starting to
bite into Europe's rebound. French industrial sales to overseas
customers weakened in the second quarter, a government survey showed. In
Italy, industrial output dropped a greater-than-expected 2.1 percent in
June.
For Italy, where fashion and luxury goods sales are a key export, the
Asian recession has been particularly harsh. The Florence-based Gucci
Group NV, which sells much of its trademark leather shoes, handbags and
belts in Asia, reported a decrease of 1.4 percent in first-quarter
sales.
At the same time, Southeast Asian rivals are ''attacking the Western
market,'' Ermanno Rondi, head of Italy's textile industry trade body,
said in an interview last week.
In the U.K., where a surging pound has prompted an export slump and grim
sentiment in the manufacturing industry, further evidence of a slowing
economy came in a report on retail sales today. Sales rose at the
smallest rate for nearly three years, as wet weather and high interest
rates kept shoppers at home, the Confederation of British Industry said.
Unchanged Rate
The Bank of England left its benchmark interest rate unchanged at 7.50
percent as expected. The central bank has already raised rates six times
in the past 16 months to try to keep the government's preferred measure
of inflation to the 2.5 percent target.
Companies are increasingly looking to faster growth in Western Europe to
compensate for losses in Asia. The Organization for Economic Cooperation
and Development forecast Germany's economy will expand 2.7 percent this
year and by 2.9 percent in 1999, with growth increasingly supported by
domestic demand.
Spain's economy grew 3.8 percent in the second quarter from a year ago
as construction, consumer demand and investment all grew, the Bank of
Spain said in its monthly report on the economy. That robust growth
helped lift Spanish new car registrations 15.7 percent in July from a
year earlier.
Germany's carmakers have been among the most eager to employ extra staff
this year as they ride on booming demand from Western Europe and the
U.S. Daimler-Benz AG, Germany's biggest company, boosted its German
workforce by 3 percent to 6,691 people in the first half from the same
period last year.
In some industries, fast-growing companies are still finding it tricky
to find qualified workers. Origin GmbH, an information technology
services company, said yesterday it faces a shortage of some 30,000
computer experts. ''We have 100 to 150 positions to fill,'' said Origin
Chief Executive Walter Preger. ''It is impossible to find enough
qualified people in Germany.''
In Sweden, an increase in students registering at job centers helped
push the jobless rate to 9.1 percent in July from 8.3 percent in June,
the Labor Board said.
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