Market Analysis

In the latest indication of the hurdles confronting Europe's largest economy, the Federal Labour Office reported on Wednesday that unemployment in Germany increased more than anticipated in July.

The number of unemployed individuals rose by 18,000 on a seasonally adjusted basis, reaching a total of 2.8 million. This increase surpassed the expectations of analysts polled by Reuters, who had predicted a rise of 15,000.

Despite this rise, the seasonally adjusted unemployment rate remained stable at 6.0%.

"The weak economic development is weighing on the labour market," said Daniel Terzenbach from the labour office. "At the beginning of the summer break, unemployment and underemployment rose more sharply than usual."

Germany's economy, which was the worst-performing major economy last year, has been struggling to rebound due to high energy costs, weak global demand, and record-high interest rates.

The outlook remains bleak as the economy unexpectedly contracted in the second quarter after narrowly avoiding a recession earlier in the year, according to the statistics office's report on Tuesday.

Looking ahead, Brzeski warned that the increasing number of insolvencies and diminishing recruitment plans in both the manufacturing and service sectors do not augur well for the labor market in the coming months.

The Ifo economic institute's employment barometer dropped to 95.4 points in July, its lowest level since February. The Ifo survey released on Wednesday indicated that while some service providers are still hiring new staff, their numbers have decreased compared to the previous month.

Paraphrasing text from "Reuters" all rights reserved by the original author.