Kay Van-Petersen
Australia’s Q3 CPI figures proved positive, says Saxo Capital Markets’ global macro strategy Kay Van-Petersen, but the banks didn’t appear to be buying it.
Article / 28 July 2016 at 5:00 GMT

3 Numbers: Germany jobless report to highlight economic resilience

editor/analyst /
United States
  • Germany’s unemployment rate is expected to be unchanged at a modest 6.1%
  • Eurozone’s Business Climate Indicator may tick lower in July
  • US jobless claims are expected to rise but remain close to a 43-year low

By James Picerno

We’ll be knee-deep in fresh economic reports again today, including the monthly numbers on unemployment data for Germany. In addition, the European Commission publishes the July figures for the Eurozone’s Business Climate Indicator, followed by the weekly update of initial jobless claims for the US.

Today’s unemployment data for Germany is expected to deliver another dose
of upbeat data as the labour market continues to show strength. Photo: iStock

Germany: Unemployment Report (0755 GMT) Recent updates show that the UK’s economy is suffering in the wake of the Brexit vote, but so far there are few signs that there’s any fallout weighing on Europe’s biggest economy.

Yesterday’s update on consumer sentiment, for instance, suggests that the mood remains relatively stable. Germany’s not immune, but for the moment it’s not obvious that the economy will pay a price for Britain’s decision to leave the European Union.

“The consumer climate in Germany weakened slightly in July,” Gfk advised in the July report on the country’s consumer climate. “Also as a result of Brexit in the United Kingdom, the Consumer Climate overall indicator forecasts 10.0 points for August, down from 10.1 points in July. Economic and income expectations suffered losses, while propensity to buy increased slightly again.”

Meanwhile, the Germany Composite PMI (a proxy for GDP) increased to a seven-month high in the flash estimate for July. “Strong tailwinds from a healthy labour market and rising demand are propelling the economy forward, while businesses so far seem to be unaffected by uncertainties around the UK’s decision to leave the EU,” a Markit economist noted last week.

Today’s unemployment data for this month will likely deliver another dose of upbeat data. The official jobless rate is widely expected to remain at a modest 6.1%. Meanwhile, the number of newly unemployed workers has fallen in each of the past 11 months through June, suggesting the labour market's still growing.

The months ahead could nevertheless prove to be challenging as the UK slides into recession, as many economists are predicting. But for the moment, Germany’s momentum still looks strong enough to smooth over any rough patches and it’s unlikely that today’s unemployment figures will provide a reason to argue otherwise.

Eurozone: Business Climate Indicator (0900 GMT) Germany’s economy may be relatively resilient to any Brexit-related blowback, but the euro area generally is somewhat less hardy.

We already know that second-quarter GDP growth for the Eurozone is at risk of decelerating when Eurostat publishes the official report next month.’s current Q2 estimate: roughly 0.3%, down from Q1’s 0.6% quarter-on-quarter pace.

Is Q3 headed for even slower growth? Today’s update of business sentiment in Europe for July offers an early clue. The June data eased slightly, dipping for the first time in four months, but the slight setback on its face is hardly worrisome. But note that Eurozone consumer sentiment fell modestly for the second month in a row in the flash estimate for July.

Will today’s first look at the business climate reading for this month turn lower again? Another decline wouldn’t be surprising or worrisome – at least not yet. But a softer reading will serve as a reminder there’s a downward bias weighing on Europe these days.

Economic activity is still rising overall, but the pace appears to be headed for a slowdown in this year’s second half. The projected downshift isn't terrible, but Europe’s modest recovery seems to be moving in the wrong direction once again.

US: Initial Jobless Claims (1230 GMT) For bears looking for warning signs for the US economy, jobless claims have been a persistent nuisance. With rare exception, this leading indicator has signalled growth for the labour market and, by extension, the economy for much of this year – even when other numbers looked worrisome. Based on what we know at the moment, however, the implied forecast in the claims data has generally been accurate.

Today’s update is expected to provide more of the same.’s consensus forecast sees claims rising 11,000 to seasonally adjusted 264,000 for the week through July 23. But as the chart below illustrates, that’s still close to the 43-year low of 248,000 that was touched back in April.

What would it take for claims to paint a dark outlook for the economy? A sustained increase over 300,000 and a run of year-over increases would probably reflect a change in the macro weather. But those warning signs are nowhere on the horizon at the moment, and today’s update isn’t going to spoil the party.

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– Edited by Gayle Bryant

Juhani Huopainen is a blogger and a macro analyst at MoreLiver’s Daily. Follow Juhani or post your comment below to engage with Saxo Bank's social trading platform.


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