Jobless figures add to German gloom

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The Independent Online
WESTERN GERMAN unemployment rose to record levels in December, while new figures showing falling industrial orders in November further dimmed hopes of economic recovery.

Seasonally adjusted unemployment rose by 5,000 in December to 2,494,000 or 8.1 per cent of the western German workforce, the Federal Labour Office reported. The eastern German jobless total grew to 1.18 million or 15.4 per cent. The figures for east and west together amounted to the highest total since unification, a dismal beginning for Chancellor Helmut Kohl's centre-right coaltion in an election year.

The 0.8 per cent fall in western German manufacturing orders in November from the previous month, taken together with a sharp 2 per cent drop in November industrial output reported on Tuesday, suggested that the tentative recovery in the western German economy in the spring and summer of last year is running out of steam.

Foreign orders fell by 1.5 per cent month-on-month, while domestic orders dropped by 0.4 per cent. 'Overall, the figures show that we are still consolidating at the bottom. No clear recovery is apparent,' said Gerhard Grebe, chief economist with Bank Julius Bar in Frankfurt.

The 5,000 rise in western German unemployment was well below most economists' expectations. 'The job figures bolster the view that the economy is stabilising rather that being about to enter a double-dip recession,' said Richard Reid, chief economist with UBS in Frankfurt. Despite the fall in foreign orders in November, the pattern is still one of better demand from abroad than at home, he said.

There is little evidence to support economists' hopes of a recovery fuelled by a pick-up in exports and capital investment.