German joblessness unexpectedly declined in December, though companies were heavily dependent on government subsidies to keep workers employed through the latest lockdowns.
A decrease of 37,000 left the total number of unemployed people at 2.776 million and the rate unchanged at 6.1%, according to the Federal Labor Agency. Economists surveyed by Bloomberg had expected a gain of 10,000.
At the same time, applications for state wage support increased, according to labor agency chief Detlef Scheele. Some 2 million workers benefited from the government’s furlough program in November, according to the latest estimates by the Ifo Institute — a number that is likely to rise.
The country has been in a hard lockdown since the middle of last month, with most retail stores, restaurants, bars, gyms and cultural venues shut to limit the spread of the coronavirus. Chancellor Angela Merkel is likely to announce an extension of the curbs beyond the current Jan. 10 deadline at a news conference later on Tuesday.
That means labor market strains will persist in the coming weeks. Overall though, German employment has been more resilient than in other European countries, in part because of its focus on manufacturing.
It’s also set to suffer less from school closures to contain the pandemic given there’s a lower share of households with children and working parents than in other European Union nations. Bloomberg Economics estimates that labor supply will fall by some 5% in Germany, compared with more than 10% in Slovenia.
Euro-area jobless data is due to be released by Eurostat on Friday, with the rate forecast to have risen to 8.5% in November.
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