YoY Down 0..1% Yet Services Surge While Manufacturing Shrinks - A Mixed Labor Market Snapshot
Economy / Finance

YoY Down 0..1% Yet Services Surge While Manufacturing Shrinks - A Mixed Labor Market Snapshot

In the fourth quarter of 2025, roughly 46.1 million people in Germany were employed. Preliminary calculations from the Federal Statistical Office (Destatis) show that, after seasonal adjustment, employment fell by 25,000 people (0.1 %) compared with the preceding quarter. In the second and third quarters of 2025 the seasonally adjusted employment figures dropped by 9,000 and 40,000 people, respectively.

When seasonal factors are omitted, the number of employees rose by 132,000 people (+0.3 %) in Q4 2025 versus Q3 2025. A seasonal uptick in employment at the end of a calendar year is normal, but the increase in 2025 was far below the average growth of +200,000 people seen between 2022 and 2024.

Against the fourth quarter of 2024, employment in Q4 2025 declined by 58,000 people (‑0.1 %). In the third quarter of 2025, for the first time since the first quarter of 2021, employment fell relative to the previous year by 16,000 people (0.0 %). The peak of year‑on‑year employment growth after the Covid‑19 pandemic occurred in the second quarter of 2022, with an increase of 679,000 people (1.5 %). After that, the growth rate steadily tapered. By the first quarter of 2025, the employment level was only 40,000 people above the 2019 benchmark (+0.1 %), and by the second quarter of 2025 just 15,000 people above (0.0 %).

Employment in the service sector rose by 122,000 people (+0.3 %) compared with the same quarter of the previous year, whereas employment outside services fell by 180,000 people (‑1.6 %). Within services, the public services, education and health subsector continued its long‑term upward trend, expanding sharply by 212,000 people (+1.7 %). The second largest gain came from other services-encompassing associations and advocacy groups-which added 17,000 people (+0.5 %). Financial and insurance services grew by 14,000 people (+1.3 %). In contrast, information and communication employment fell by 15,000 people (‑1.0 %). Trade, transport and hospitality decreased by 35,000 people (‑0.3 %). Business services, including recruitment and temporary staffing, saw a larger downturn of 74,000 people (‑1.2 %).

In manufacturing (excluding construction), employment shrank by 160,000 people (‑2.0 %) in Q4 2025 compared with the same quarter of the previous year. Construction employment likewise fell by 20,000 people (‑0.8 %). The agriculture, forestry and fishing sector remained unchanged.

The rise in compulsory social‑insurance employment ended in Q4 2025, according to the Federal Office. Employment levels, extrapolated from the Federal Employment Agency’s high‑fidelity estimates from September 2025, showed a modest decline. Losses also continued among workers in marginal activities-part‑time, temporary work and placement programs.

Overall, the number of employees in Q4 2025 compared with Q4 2024 fell by 31,000 people (‑0.1 %) to 42.5 million. Self‑employed workers, including family helpers, also decreased, down 27,000 people (‑0.7 %) to 3.7 million.

According to preliminary data from the German Institute for Economic Research (IAB), the average number of hours worked per employed person rose by 0.7 % in Q4 2025 relative to the same quarter in 2019, reaching 336.4 hours. The overall economic labour volume-the product of the slightly lower employment figure and the higher average hours-grew by 0.5 % to 15.5 billion hours in that period.