That Anomalous German Jobless Print Is Somewhat Unnerving, No?

Something just went a wee bit wrong with the jobless numbers out of Germany.

Apparently, some of this is down to a statistical change related to how people are classified, but whatever the case, the number of people out of work jumped by 60,000 in May, versus estimates of (get this), a decline of 8,000.

The range of estimates underscores the anomalous nature of this print. Out of 24 economists surveyed, forecasts ranged from -14,000 to 0.

Again, the official word is that around two thirds of that increase is attributable to a statistical reclassification, but the Federal Labor Agency did not deny that May’s numbers are evidence that the slowdown in the German economy is starting to manifest itself in the jobs market.

This comes just days after Ifo business confidence printed 97.9, the lowest since 2014.

In the event the generalized sense of angst persists and starts to reduce demand for new employees, it could undercut the German consumer, imperiling one of the pillars that’s kept the economy afloat amid a pretty nasty manufacturing slump.

Germany skirted a technical recession in Q4 and although the economy rebounded in Q1 to expand 0.4%, exactly nobody would describe this as an “out of the woods”-type situation.

In the February edition of BofA’s European credit investor survey, some 40% of respondents said “the key to getting the Eurozone out of its current growth funk is via China stimulus supporting German exports.”

(BofA)

On one hand, the resumption of the trade war tips more stimulus from Beijing. On the other hand, until that stimulus comes through, everyone is left in the lurch. It’s also notable that recent stimulus measures from China seem to be inwardly-focused, which suggests a lack of “spillover” (and spillover is a positive thing here) to the rest of the world.

In addition to worries about the read-through of a further deceleration in China, the threat of auto tariffs is still casting a pall over the outlook for Europe. The Trump administration delayed a decision on the imposition of those prospective duties, but that only adds to the uncertainty – like having to wait half a year to find out if you’ve got cancer. Recall that EU car registrations slumped for an eighth consecutive month in April.