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German Unemployment Rate At Record Low

Germany's unemployment rate has hit record low numbers.

On May 31, The Associated Press reported that, according to Germany's Federal Labor Agency, the country's unemployment rate fell from 5.8 percent in April to 5.7 percent in May. These numbers were adjusted for seasonal variations; in unadjusted terms, the rate fell to 5.6 percent with 71,000 fewer people being unemployed. According to Reuters, this is the lowest unemployment rate that Germany has experienced since its reunification in 1991. 

Bloomberg reports that, when seasonally adjusted, the number of unemployed individuals fell by 9,000 to 2.54 million. In a Bloomberg survey, the decline was projected to be 15,000. A 15,000 fall was also predicted in a Reuters poll. 

IHS Markit economist Timo Klein said that there has been a downward trend in Germany's unemployment rate since 2009, according to the AP. He credited this boost in the labor force to an influx of individuals from other European countries as well as refugees from the Middle East. 

"Overall, labor market conditions remain remarkably healthy in Germany," Klein said. 

Joerg Zener, chief economist of the KfW public investment bank, seemed to expect Germany's success to continue.

"There are few places for potential disappointments to hide in prospects for the labor market this year," Zener said, according to the AFP. 

In addition, Zener said that the construction sector has been a factor in Germany's falling unemployment. He cited low interest rates from the European Central Bank, which have encouraged investment in property.

Germany is also experiencing economic growth in addition to its falling unemployment rates. According to Bloomberg, the country's economy expanded by 0.6 percent during the first quarter; Bloomberg credits this rise to domestic demand and global trade. 

"In line with good economic conditions, the labor market continues to develop favorably," said Detlef Scheele, the head of the Federal Labor Agency, in a statement. "The number of jobless people extended its decline in May and employment once again grew at a robust pace. Demand for labor also continues to be at very high levels."

According to the AP, Germany's economic growth and falling employment are likely to aid German Chancellor Angela Merkel in the country's upcoming elections in September. 

DW reports that in addition to Germany, the eurozone is also experiencing a drop in unemployment. On May 31, the European statistics office Eurostat reported that the seasonally adjusted unemployment rate dropped to 9.3 percent in April from 9.4 percent the previous month. This is the lowest unemployment rate the eurozone has experienced since May 2009. 

According to Bloomberg, the European Central Bank is relying on Germany's low unemployment rate to push wages higher, something that would help restore sustainable inflation in the euro area.

Sources: Bloomberg, Reuters, AP via U.S. New & World Report, AFP via The Business Times, DW / Photo credit: fdecomite/Flickr

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