The number of unemployed has slightly increased in August (1 000). Compared to August 2013 this number has decreased by -45 000.
Employment is on a positive trend. During the last 3 months (May – July) it was up by 0.9% at annual rate. But surveys this summer have cast a doubt on such a momentum for the coming months.
On the first graph we see that the labor market dynamics has changed recently. After a long period of uncertainty in 2012 and 2013 there was a real improvement until April. From the beginning of last spring, there is more uncertainty on the labor market behavior. Economic conditions have changed and this can be seen on the labor market profile.
On the employment side, we can compare the employment momentum to the employment component of the PMI/Markit survey. The two indicators have consistent profiles but the survey index doesn’t improve anymore. In the short-run we cannot expect a rapid improvement on the number of employed persons. But it should remain positive.
On a longer period, we can compare the employment annual change to the IFO index. Again there is a good consistency between the two, but IFO has probably peaked at the beginning of 2014. Due to the lead of IFO on employment, this means that German employment will not increase rapidly during the second part of this year.
In these conditions can we expect a strong increase in German wages?