German unemployment edged up in September due partly to late school holidays in some states, but the jobless rate held at a record low in a further sign that consumer spending will propel growth in Europe's largest economy this year. Retail sales data also released on Wednesday showed robust domestic demand so far this year and economists said the arrival of record numbers of migrants would support the economy.
"Although there was an uptick on a seasonally-adjusted basis, the overall positive trend on the labour market continues," Labour Office chief Frank-Juergen Weise said. ING chief economist Carsten Brzeski said the higher seasonally-adjusted figure was probably the effect of summer holidays running into September in more states than usual.
Overall, the labour market looked strong and its prospects remained bright, Brzeski said. "The German labour market will remain an important growth driver this year and beyond." The seasonally-adjusted unemployment total rose by 2,000 to 2.795 million, data from the Labour Office showed. Analysts had expected a drop of 5,000 on average.
The unadjusted jobless total fell, however, by around 88,000 to 2.708 million which was the lowest level since 1991, the Office said. The adjusted jobless rate held steady at its post-reunification low of 6.4 percent for the sixth month in a row. In another positive sign for private consumption, German retail sales jumped by 2.8 percent in real terms from January to August compared with the same period in 2014, data showed on Wednesday.
The statistics office said that was the strongest increase it had recorded for that period since it began collecting the data in 1994. Germany's HDE retail association has said it sees a record year ahead thanks to rising wages and low inflation. In addition, the recent influx of refugees to Germany is expected to further boost sales. "Every refugee who spends helps the retail sector," said BayernLB economist Stefan Kipar.
The German banking association expects refugees to buoy demand and add up to 0.2 percent to economic output. The medium-term effects, however, depended highly on how fast the new arrivals could be integrated into the job market, it said. The labour office research institute predicts that the new arrivals could push up unemployment next year by 70,000. "The people who come to us today are not the skilled workers of tomorrow," Labour Office manager Raimund Becker said. "They are the skilled workers of the day after tomorrow."
Senior conservatives are therefore urging exemptions for refugees from the new minimum wage, arguing that those with few qualifications could struggle to find jobs at the 8.50 euro ($9.60) hourly rate.
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