Germany’s unemployment rate is expected to remain stable at its new historical low of 6.4%. While conditions have remained robust in the German labour market, there has been some weakening in the outlook. Societe Generale expects the number of unemployed in Germany in April to have declined by 12 thousand, following a drop of 14K thousand in March. There is a need to monitor trends closely, as any further weakening could imply downward surprises to growth. The baseline scenarios is the continuing strength of the labor market, which will gradually feed higher wages in the coming years, similar to developments at the start of this year. The low inflation rate adds to gains in real disposable incomes this year and is expected to deliver robust household consumption.
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