German unemployment surges in April as Covid-19 takes its toll
German unemployment grew in April as the coronavirus outbreak took its toll, according to figures released by Destatis on Thursday.
The unemployment rate increased to 5.8% from 5% in march, coming in worse than expectations for a rate of 5.2%. The number of people out of work rose by 373,000 to 2.639m, which was significantly higher than the 74,500 jump expected.
The data also showed that there were 751,000 requests from companies to put 10.1m staff on the country’s ‘short-time work’ scheme, Kurzarbeit.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the German labour market was finally "feeling the pain" from the Covid-19 outbreak and the associated slump in economic activity.
"The true dislocation, however, likely is much higher. The jump in unemployment at the start of Q2 excludes workers covered under the Kurzarbeit scheme, where 7.5m workers are now covered. In a strange way then, this headline probably has to count as somewhat good news. Comparisons are difficult across countries, but indulge us. The increase in German jobless claims through April amount to 0.5% of the total population.
"By contrast, the around 20m claims filed in the US through April- pending today’s data - is just over 6% of the population. This, in a nutshell, is the difference between a job retention scheme and a boost to unemployment insurance, though in fairness the treatment of furloughed/temporarily laid off workers in the labour market statistics is not an exact science.
"In any case, while Germany’s labour market likely will be relatively shielded on a headline level, we should not sugar coat the numbers. They aren’t pretty. The monthly increase in claims is a record-high."