German Jobs Recovery Accelerates as Curbs Hurt Less Than Feared

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German joblessness fell at a much faster pace than anticipated in January as the economy comes to terms with coronavirus curbs to contain surging infections. 

Unemployment in Europe's largest economy declined by 48,000, pushing the jobless rate down to 5.1%. Economists had forecast a drop of just 6,000.

“The labor market had a good start to 2022,” said Daniel Terzenbach, who is in charge of regions at the Federal Labor Agency.  

Tuesday's numbers show the resilience of the German economy, which -- after an initial strong rebound from the pandemic -- is now hampered by supply bottlenecks and higher prices. With infection numbers reaching new records, Germany has reintroduced restrictions on activity, targeting mainly unvaccinated people. 

Still, German output contracted in the final quarter of last year and might not resume its recovery until the current virus wave passes.

Supply constraints are only beginning to ease gradually, and the spread of omicron in Asia raises the specter of a further setback for Germany's key manufacturing sector. More shortages could continue to fuel price increases, with inflation proving unexpectedly strong in January. 

While the labor market has largely managed to weather those challenges, the number of furloughed workers has been on the rise since November, estimates by the Ifo Institute show. In December, 2.6% of workers were on furlough in Germany, it said last month.

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