Unemployment in Germany likely to have declined in June

Unemployment in Germany is likely to have dropped in June. According to a Societe Generale research note, unemployment is expected to have fallen by 8,000, with the rate likely to have stayed steady at 6.1 percent. Previous concerns regarding a material deceleration of the Germany labor market continue to diminish. Meanwhile, growth in employment is expected to have continued to increase by almost 50,000 per month.

This gives quite a steady backdrop to domestic demand-led expansion in Germany for the quarters to come, noted Societe Generale. However, wage deals in recent times have indicated towards a more subdued development in wage growth than anticipated earlier.

This seems to be connected to the detail that inflation in Germany has continued to stay low, hence stimulating real incomes even at low wage growth.

Trade unions have also concentrated more on security of job and other benefits than rises in wage. If the headline inflation accelerates decently in the coming year, there is a room for trade unions to compensate for this loss in real incomes given the labor market tightening, according to Societe Generale.