THE TAKEAWAY: German unemployment rises by 19K, despite expectations for 10K fall -> positive labor market trend was said to have been outweighed by slowdown of economic momentum -> Euro drops as weak PMI manufacturing also comes in
Unemployment unexpectedly rose in April by a seasonally adjusted 19,000 people to 2.87 million. The jump in unemployment was vastly higher than analysts’ expectations for the rate to fall by 10,000 people. According to the Nuremberg based Federal Labor Agency, the current unemployment rate now stands at 6.8%, as opposed to March’s rate of 6.7%.
The positive trend in the labor market was outweighed by the loss of momentum in the economy according to Federal Labor Agency President Frank-Juergen Weise.
The weak employment data was released at the same time that the German PMI Manufacturing survey came in weaker than expected. High unemployment rates will usually hurt consumer spending and drag down economic growth, and this morning’s signs of a slowing economy come as a result of the worry over the European debt crisis.
EUR/USD took a freefall in the half hour leading up to the unemployment numbers, as weaker than expected PMI data came in from Italy and France. The Euro continued to weaken following the jobs release, towards last week’s 1.3155 lows.