German jobless rate likely remained stable in September, inflation expected to have edged up

Germany’s unemployment is expected to have fallen marginally in September. According to a Societe Generale research report, unemployment is likely to have dropped by 2000 keeping the jobless rate stable at 6.1 percent. After recovering robustly until mid-year, employment sentiment has begun weakening again in the summer. This might be because of certain seasonal weakness, but also likely reflect larger uncertainty on external demand after the Brexit vote.

However, the German labor market is likely to be good shape. A larger slowdown in the increase of vacancies would be required to begin worrying about a more material slowdown in employment, said Societe Generale.

Meanwhile, the CPI and HICP inflation in the country are likely to have rebounded slightly to 0.5 percent and 0.4 percent respectively, noted Societe Generale. Energy prices are expected to have improved after falling for two consecutive months. Base effects, along with a slight monthly gain in energy prices, would result in a visible improvement in the energy component. Meanwhile, food prices are expected to weaken for the second consecutive month after having increased to 1.5 percent in July.

Core inflation is expected to have remained stable mainly because of stable services inflation as non-energy industrial goods prices are likely to fall marginally. Core inflation had weakened to 1 percent year-on-year in August from 1.3 percent year-on-year in July.

“Looking ahead, we expect German HICP inflation to continue recovering at a faster pace, rising above 1.0 percent by the end of the year”, added Societe Generale.