2021.03.0212:58:00UTC+00German Unemployment Unexpectedly Climbs In February

Germany's unemployment rose in February, defying expectations for a decline, mainly due to the return of lockdown measures to battle the coronavirus pandemic that has severely hurt economic activity. The number of unemployed grew by a seasonally adjusted 9,000 persons from January to 2.752 million, latest data from the Federal Labor Agency showed Tuesday.

Economists had forecast a decline of 13,000. In January, the figure dropped by 37,000 persons.

The latest increase in unemployment was the first since June last year. The seasonally adjusted jobless rate was 6.0 percent, same as in January. That matched economists' expectations. "Short-time working [Kurzarbeit] continues to secure employment on a large scale and prevents unemployment," Federal Labor Agency Chief Detlef Scheele said.

"Individual sectors are feeling the effects of the lockdown, but overall employment is recovering."

Germany was among the major countries to restore lockdown measures in November amid a resurgence in the coronavirus infections across Europe. German media reports suggested on Tuesday that Chancellor Angela Merkel is likely to extend the current lockdown until March 28 over fears that more aggressive strains of the virus are spreading fast. The Federal Labor Agency said around 2.39 million people benefited from short-time working in December, under the government's Kurzarbeit scheme to prompt employers to retain jobs. The number of employees benefiting from the Kurzarbeit scheme had peaked at 6 million in April. Thereafter it eased before rising in November as lockdown restrictions returned. "Despite the small increase, this morning's headline numbers suggest that the German labour market is still getting through the crisis relatively well," ING economist Carsten Brzeski said. "However, the rising number of short-time workers, as well as the longer-term impact from the ongoing second lockdown and a high risk of insolvencies in 2021, clearly argue against too much optimism."

Earlier on Tuesday, Destatis reported that retail sales decreased for a second straight month and at a faster than expected pace in January.

Retail sales fell 4.5 percent month-on-month, which was worse than the 0.3 percent decline economists had expected. In December, sales decreased 9.1 percent.

Sales dropped 8.7 percent year-on-year, while economists had forecast a 1.3 percent gain. In December, sales grew 2.8 percent.

The latest annual decline was the first since April last year, when sales fell 5.6 percent.

These results can be explained by the second COVID-19 lockdown, which led to a partial retail closure starting on December 16, 2020, Destatis said.