The German unemployment rate has increased by more than anticipated, putting an end to any hopes of a recovery from the downturn.
The Federal Labor Agency reported that there were 25,000 more people without a job in May. This was far ahead of Bloomberg’s expectations for 7,000.
The unemployment rate remained at 5.9 percent.
Andrea Nahles, the head of the Federal Labor Agency, said: “The spring rebound hasn’t taken off this time.”
In May there were 702,000 vacancies in Germany, which is 65,000 less than one year earlier.
A labour office study shows that the number of occupations experiencing a severe shortage of skilled workers is down to 183 from 200.
According to the office, there is a shortage of skilled workers in the fields of structural engineering, facade construction and aerospace technology.
According to Ms Nahles, however, this does not indicate a trend that will last for a long time. She stated: “Due demographic changes, many skilled and well-qualified workers will continue leaving the labour market over the next few years.”
Germany will recover from a recession by the end of 2023.
Ifo Institute stated in March that Germany would be the worst performing rich economy in the World for the second consecutive year as Olaf Scholz struggles with a property slump and uncertainty about net zero targets.
Last month, the economic recovery stalled as business confidence slowed down.
The Ifo Business Climate Index remained stable in May after a three-month streak of increasing values that had raised expectations of a strong economic recovery.
The German Dax fell by as much as 1.3% on Tuesday, amid fears that the US economy may not be as strong as previously thought.
Bloomberg News reports that the European Central Bank will soon be pushing several German banks towards building up more reserves in order to protect them against defaults on property loans.
German banks with large portfolios of real estate have seen their profits suffer as they have increased their reserves for loan losses in the face of a housing slump, when falling property prices forced developers to cancel their projects.
Last year, eleven of Germany’s largest banks set aside €2.5bn (£2.21bn ) to offset commercial real estate loan defaults.
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