Roundup: Germany sees modest labor market relief, but factory layoffs, weak demand drag on

Berlin [Germany], November 29: Germany's labor market showed slight improvement in November after recent months of elevated unemployment, even as companies continued to plan job cuts. Europe's largest economy is seeing its sharpest job losses in key manufacturing industries in a decade.
The unemployment rate eased to 6.1 percent in November, down 0.1 percentage point from October, figures from the Federal Employment Agency (BA) showed on Friday. The number of unemployed people fell by 26,000 to 2.89 million.
The labor market has gradually improved in recent months, with the jobless rate declining each month since reaching 6.4 percent in August, when unemployed exceeded 3 million for the first time in a decade.
However, compared with a year earlier, labor market remains under significant pressure amid a sluggish economy. The number of unemployed in November was 111,000 higher than a year ago, and the jobless rate was up by 0.2 percentage point.
"The economic weakness persists and the labor market remains without momentum," BA head Andrea Nahles said, citing stagnant employment and still subdued labor demand. Recent BA data also indicate that employment continues to trend downward.
Carsten Brzeski, global head of macro at ING, cautioned that with the German economy effectively stagnating for more than five years and industry facing severe structural challenges, a further deterioration in the labor market had become only a matter of time. Recruitment plans in both manufacturing and services have continued to weaken, he noted, and vacancies have fallen to levels last seen during the pandemic.
BA data showed that registered vacancies, or labor demand, continued to decline in November, dropping by 44,000 year-on-year to 624,000. Weighed down by a weak economy and collapsing profits, manufacturing companies have repeatedly announced cost-cutting measures, triggering frequent rounds of layoffs.
This weakening demand for labor is increasingly reflected in hard employment data, and the downturn is clearly showing up in manufacturing employment. According to the latest data from the Federal Statistical Office (Destatis), the manufacturing sector employed 5.43 million people at the end of the third quarter, 120,300 fewer than a year earlier and a decline of 2.2 percent.
The automotive industry, Germany's second-largest industrial sector after mechanical engineering, shed 48,700 jobs, or 6.3 percent, over the same period. It now employs 721,400 people, only slightly above its lowest level since 2011. Suppliers, which account for roughly 40 percent of the sector's workforce, were hit particularly hard, with headcount plunging 11.1 percent year-on-year.
Even heading into the fourth quarter, German companies showed no signs of easing layoffs and grew increasingly cautious in their workforce planning. According to the ifo Institute's monthly survey released on Wednesday, the employment barometer fell from 93.5 points to 92.5 in November. Employment expectations in manufacturing continued to decline, ifo said, while companies in services, and even in retail, still plan to reduce staff ahead of the Christmas season.
This reflects overall weak consumer sentiment amid rising uncertainty about the economic outlook. The German economy stagnated in the third quarter, while private consumption fell by 0.3 percent quarter-on-quarter, marking its first decline since the fourth quarter of 2023.
A separate report released by Destatis on Friday also pointed to ongoing layoff activity. It showed that real wages rose by 2.7 percent year-on-year in the third quarter, the strongest increase so far this year. Dominik Groll, an economist at the Kiel Institute for the World Economy, noted that part of the increase was likely driven by high severance payments linked to layoffs, particularly in manufacturing. More jobs were cut in the manufacturing sector in the first three quarters of 2025 than in the whole of 2024, he added.
Source: Xinhua News Agency