According to the Labor Market Barometer released by the Institute for Employment Research (IAB) in May, the indicator registered its first increase in half a year. The institute announced on Wednesday that this early indicator rose by 0.1 points, reaching 99.6 points. Despite this marginal rise, the overall signal still suggests a pessimistic outlook for the trajectory of the German labor market.
The index component tracking the forecast of employment in Germany has stabilized at 100.1 points, slightly above the neutral benchmark. While this suggests generally stable employment, the outlook is still at its weakest point since before the pandemic. The IAB attributes this weakness primarily to substantial job losses occurring within the industrial sector. Concurrently, the component forecasting unemployment rose by 0.1 points from the previous month to 99.0 points, meaning that the unemployment forecast remains firmly in pessimistic territory.
Enzo Weber, head of the research department for “Forecasts and Macroeconomic Analysis” at the IAB, commented on the situation, stating, “There is no collapse in the labor market, but there is also no breakthrough. For that, we would need more momentum and new jobs”.
Turning to the broader picture, the European Labour Market Barometer held steady at 100.1 points during May. This early indicator, which combines data from the European Network of Public Employment Services and the IAB, remains slightly above the neutral threshold of 100 points. Weber explained that European labor markets are lacking a clear direction, as periods of recovery are being offset by setbacks, such as the oil price shock.
