German unemployment fell by 20k in July, the same as in June (and in line with the consensus; BarCap: -13k). While the pace of decrease in the past two months has been lower than in March (-39k), April (-68k) and May (-41k), there were several special factors that had been contributing to the more rapid pace of decline during the spring months, namely, special training schemes and the recovery of the construction sector after the very cold winter. The unemployment rate on the national definition fell to 7.6% from 7.7% in both May and June (and 7.8% in April).
 
Meanwhile, German employment in June rose by 32k (0.1% m/m SA), following gains of 52k in May, 63k in April (boosted by the timing of Easter) and 23k in March. In y/y terms German employment was again positive at 0.3% (from 0.2% in May). German employment in SA terms has risen gradually every month since last November.
 
Looking ahead, we expect the German labour market to continue to improve at a quickening pace. Hiring intentions, as reflected in the PMI and IFO surveys, have risen significantly, and these series have historically been good leading indicators of actual employment (see charts). The number of short-term workers has been declining appreciably. As well, the number of unsubsidised job vacancies has continued to rise, at a monthly pace of 14k (SA) in the three months to July (a record since the series began in December 1999).
 
With conditions in most other euro area labour markets much more sluggish, it is important that the German labour market continues to show further significant improvement to keep a lid on any further increases in the euro area unemployment rate (which has been steady at 10.0% in the past three months).
 
 

source: BarCap