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{UAH} German jobless drop, manufacturing grows in boost to Merkel campaign

German jobless drop, manufacturing grows in boost to Merkel campaign


BERLIN(Reuters) - The number of unemployed Germans fell more than expected in July while the manufacturing sector expanded, adding to signs of an economy in rude health the month before Chancellor Angela Merkel bids for a fourth term in office.

Merkel's conservatives, who polls show look set to emerge from the Sept. 24 election as the largest party by far, are brandishing their economic credentials and promising full employment by 2025.

An INSA poll on Tuesday gave them a 12.5 point lead over their nearest challengers, the Social Democrats.

In a boon to the conservatives' campaign, data from the Federal Labour Office on Tuesday showed the seasonally adjusted jobless total fell by 9,000 to 2.537 million - steeper than the decline of 5,000 forecast in a Reuters poll.

The unemployment rate was unchanged as expected at 5.7 percent, its lowest level since reunification in 1990.

Data from the Federal Labour Office on Monday had shown the need for staff at its highest level since early 2005, with demand for employees higher than a year ago in all areas except the public sector and education.

"All economic indicators point to the upward trend in employment continuing into the second half of the year," said Joerg Zeuner, chief economist at KfW state development bank.

Refugee Bottleneck

The drop in unemployment came despite a growing number of unemployed refugees, Zeuner said. More than a million migrants arrived in Germany over the last two years and many of them lack the language or vocational skills to start work immediately while legal constraints also play a role.

Zeuner added that the prospects for 2018 were overshadowed by the latent threat of a trade conflict with the United States and Britain's looming departure from the European Union.

A survey of purchasing managers published on Tuesday showed Germany's mighty manufacturing sector also expanded in July, though the rate was a bit weaker due to a slowdown in new orders. But manufacturers continued to hire new staff.

Markit economist Trevor Balchin said the sector had lost some momentum in July but added: "This was still indicative of marked overall growth, however, with rates of expansion for output, new orders and jobs remaining historically sharp."

Data from the VDMA industry association showed engineering orders rose 2 percent in real terms in June from the previous year, with a surge in demand from countries outside the euro zone offsetting a slump in contracts from euro zone clients.

VDMA chief economist Ralph Wiechers said the upturn had been seen in almost all areas of engineering, with only a few branches complaining of a drop in orders.

"Engineering firms in Germany are starting the second half of the year in a good mood," VDMA said, adding that contracts had picked up 4 percent in real terms in the first half of 2017.

Additional reporting by Emma Thomasson, Madeline Chambers and Joseph Nasr; Writing by Michelle Martin; editing by John Stonestreet


Gwokto La'Kitgum
"Even a small dog can piss on a tall building" Jim Hightower


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