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German jobless hits 5-year high
BERLIN, Germany (CNN) -- German unemployment rose on Thursday to its highest level in five years as Europe's biggest economy struggled to recover from a recession. The number of people seeking work on a seasonal adjusted basis rose by 67,000 to 4.335 million in February, the Federal Labor Office said on Thursday. The unadjusted figure hit 4.706 million, its highest level since February 1998. Analysts polled by Reuters had been expecting the seasonal adjusted number to increase by about 33,700. "The labor market cannot recover while the economy stagnates,'' said Florian Gerster, the president of the Federal Labor Office. Daniela Etschberger at Dresdner Kleinwort Wasserstein, told Reuters the number of people out of work rose by more than the 40,000 that her bank had expected. "The jobless data will increase the pressure on the government to initiate reforms, that's possibly the only positive thing to come out of this,'' she said. "Economic conditions are so weak it is unlikely firms will start taking on more staff, so there's no improvement in sight. I think joblessness will continue to rise in coming months.'' The gloomy news will do little to improve Schroeder's standing with the electorate. In regional elections on February 2, Schroeder's Social Democratic Party lost vital seats to the opposition CDU over his handling of the economy. (Full story) The data could further dent consumer confidence and their willingness to spend. That could make it more difficult for the government to hits its lowered growth target and may push the economy into its second recession in two years. Earlier this year, the government cut its growth target to 1 percent for 2003 from 1.5 percent. The economy grew 0.2 percent last year – its slowest in nine years. Gerster said he expected a significant fall in the adjusted unemployment numbers by the end of 2003. "It a mixture of hope and probability," said Gerster, adding that the employment numbers would not improve unless an there is an upturn in the economy. The latest numbers would put more pressure on the European Central Bank to cut interest rates to boost the flagging economy of the 12-nation euro zone. (Full story)
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