German Employment

While the pace of the German economy slowed in the third quarter of this year, the pace of employment rose. Total employment was 40,432 thousand in the third quarter, compared with 40,350 thousand in the second quarter. In the important manufacturing sector, employment in manufacturing and mining rose from 4,969 thousand in the second quarter to 5,021 thousand in the third.

Employment is typically a lagging indicator and it is not unusual to see it increase as production and sales slow. The leading role of sales and the lagging role of employment in the manufacturing sector are clearly evident in the first chart. The year to year increase in Sales fell from 17.3% in the second quarter to 13.7% in the third, while the year to year increase in employment improved from a 3.2% decline to a 1.4% decline. Wages and Salaries in manufacturing, like employment, lag sales as can be seen in the second chart.

As a result of German policies fostering the retention of labor during the recession, unemployment in Germany did not increase as much as it did in other European Union Countries, four of which are shown in the third chart. At the end of 2005 the Germany unemployment rate at 10.5% was the highest among the four. By the third quarter of this year it was the lowest.