Employment in Germany rises only weakly in the second quarter

Economic stagnation is slowing the labor market

The statisticians draw on data from, among others, the Federal Employment Agency and the personnel statistics for their estimate. In previous quarters, employment growth in Germany had already slowed; now the trend is solidifying. Industry associations and trade unions also point to a rising number of vacant positions, which are sometimes difficult to fill.

Analysts attribute the weakness, among other things, to weak industrial production, declining order intake, and subdued investment. In addition, there are uncertainties in connection with energy policy and the global trade situation. All of this dampens companies' willingness to hire additional staff.

Preliminary figures and possible revisions

The Federal Statistical Office points out that the figures are preliminary and may be revised in the coming months. Seasonal effects, such as those caused by holiday periods or weather-related fluctuations in the construction sector, have been taken into account in the calculation. At the same time, the first estimate does not yet contain complete data from the personnel statistics.

Observers interpret the weak job creation as an indication that the labor market is in a phase of consolidation. While employment in service sectors continues to grow, manufacturing is losing momentum. The number of marginally employed persons has also recently stagnated.

For the coming quarters, economists expect only a gradual recovery. The decisive factor is whether industrial production picks up again and order intake stabilizes. Hantzsch pointed out that business confidence, according to the latest ZEW economic expectations, remains low.

Outlook: only slow recovery expected

The federal government had expected an employment increase for the current year in its spring projection, although this lags behind earlier estimates. If the trend now observed continues, tax revenues and social security contributions are likely to be lower than budgeted.

The Federal Statistical Office will publish the next employment data on schedule next month. The detailed evaluation by economic sector and region will then be available together with revised previous-quarter values.

In the meantime, labor market researchers point out that the employment rate in Germany remains high in international comparison. The current weakness describes less a slump than a normalization after years of strong growth in the first half of the decade.

Should companies reduce their investments, job creation could continue to slow according to observers' assessment. Conversely, rising employment is considered a support for private consumption and thus also for the economy.