German unemployment continues to retreat in September

Germany's labour market continued to improve in September, albeit by a bit less than during the preceding months.

According to the Federal Labor Agency, the number of unemployment claims dropped by 30,000 during the month while the rate of unemployment was unchanged at 5.5%.

Economists had forecast a 37,000 person drop in the number of claims and a one tenth of a percentage point dip in the unemployment rate to 5.4%.

Before the pandemic, unemployment was at 5.0%; however, the number of applications for the government's furlough scheme fell to some 3.0m.

The latter was only "slightly" higher than before the onslaught of Covid-19, an indicator the labour market was healing, Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.

Leading indicators were also pointing to a continued retreat in unemployment in Germany, Vistesen said in a research note sent to clients.

On the flip-side nevertheless, Vistesen conceded that supply-side issues posed a bit of a threat.

"We remain confident that it will fall further. We concede that lingering supply-side constraints, which are now feeding through to demand, threaten [ our call for continued declines in unemployment] — especially as it relates to manufacturing employment — but just because the rate of decline in claims is now slowing doesn’t mean that it will stall."