2023.03.3113:18:00UTC+00German Unemployment Unexpectedly Rises; Retail Sales Fall

Germany's unemployment unexpectedly increased in March and retail sales logged a surprise fall, adding evidence to the view that the biggest euro area economy landed in a technical recession in the first quarter. The Federal Employment Agency reported Friday that the jobless rate rose to 5.6 percent in March. The rate was forecast to remain unchanged at 5.5 percent.

The number of people out of work climbed notably by 16,000 in March after an increase of 6,000 in February. Unemployment was expected to rise moderately by 3,000.

The labor market was robust overall in March as well, said Andrea Nahles, chairperson of the Federal Labor Agency. However, the weak economy is leaving its mark, the spring revival is only beginning to take hold.

Nonetheless, labor force survey results published by Destatis for the month of February showed that the number of unemployed decreased by 14,700 from the previous month to 1.29 million. The adjusted jobless rate was 2.9 percent.

On an unadjusted basis, the unemployment rate slid to 3.0 percent from 3.2 percent in the previous year.

Another data from Destatis showed that retail sales declined unexpectedly in February as higher inflation weighed on consumer spending.

Real retail sales dropped 1.3 percent from January, confounding expectations for an increase of 0.5 percent. On a yearly basis, sales registered a decrease of 7.1 percent, worse than economists' forecast of 6.1 percent drop.

In the March monthly report, Bundesbank said the German economy is likely to fall in the first quarter but the decline will be slower than the 0.4 percent fall registered in the final quarter of 2022.