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German job market data disappoints in further setback for recovery

·2-min read
German Economy Minister Altmaier presents updated GDP growth forecast

BERLIN (Reuters) - German unemployment rose unexpectedly in April and companies put more staff on shorter working hours in subsidized job protection schemes, data showed on Thursday, in a further pandemic-related setback for a fragile recovery in Europe's largest economy.

Germany has extended restrictions on shopping, travel and social life as authorities struggle to contain a third wave of COVID-19 infections linked to the more contagious B117 variant of the coronavirus which first emerged in Britain.

The Labour Office said the number of people out of work increased by 9,000 in seasonally adjusted terms to 2.76 million. A Reuters poll had forecast a fall of 10,000.

The seasonally adjusted unemployment rate remained unchanged compared with the previous month at 6.0%.

The number of employees put on short-time work schemes increased to 3.27 million in February from 2.9 million in January, the office added.

"The ongoing restrictions in many areas are slowing down the recovery, but are not leading to any new burdens overall," Labour Office head Detlef Scheele said.

Without counting out the normally positive spring effects on the labour market, unemployment actually fell by more than 56,000 to 2.771 million, the office said.

The extended COVID-19 restrictions are expected to delay Germany's economic recovery, with gross domestic product seen shrinking by 1.5% quarter-on-quarter in the first three months of this year.

The Federal Statistics Office will publish its first estimate for first-quarter GDP on Friday.

The business outlook is also clouded by acute chip supply bottlenecks in the automobile industry.

For 2021 as a whole, the government expects the economy to grow by 3.5%, following a plunge of nearly 5% in the previous year. This means the economy won't reach its pre-pandemic level before 2022.

(Reporting by Michael Nienaber; Editing by Kirsti Knolle Editing and Maria Sheahan)