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German unemployment remains stable, core inflation 1 percent less

Unemployment in Germany remained stable at 5 percent of the labor force in March. That was announced by the German Federal Labor Office. The number of unemployed in Germany rose in absolute terms by 1,000 this month. The figures have been adjusted for seasonal effects.

According to ING economist Carsten Brzeski, there is silence before the storm. He pointed out that the effects of the new coronavirus were already somewhat noticeable. The weakest improvement in the labor market since 2009, for example, seems to have already had some grip on the labor market.

During the financial crisis, short-time working arrangements were one of the main tools of the German government to stabilize the economy. The first estimates of those clients are expected later on Tuesday.

“All hope is vested in an instrument for crisis response from the financial crisis,” said the economist.

Inflation in the eurozone fell sharply in March under pressure from lower energy prices. This was reported by the European statistics agency Eurostat on the basis of a provisional figure. Inflation was 0.7 percent year-on-year, from 1.2 percent in February. That is the lowest level since October. Economists generally expected inflation to fall to 0.8 percent.

Core inflation, without the impact of sharply fluctuating prices for energy and food and beverages, fell to 1 percent from 1.2 percent a month earlier. Energy prices have fallen sharply due to the price war on the oil market between Saudi Arabia and Russia and the negative impact on oil demand due to the corona crisis.

Inflation in the eurozone is now far from the target of nearly 2 percent for the European Central Bank (ECB). The question now is what effects the corona crisis and the economic support measures of the ECB will have on inflation in the near future. Prices may come under further pressure as the European economy has been largely paralyzed by the crisis.

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