More Germans left without jobs this summer as economy contracts

Germany's unemployment rate is rising, with an increase of 18,000 jobless individuals in July, according to the Bundesagentur für Arbeit (BA). The total number of unemployed reached 2.81 million, marking a year-on-year increase of 192,000. This rise is attributed to the typical summer slowdown in hiring, but the current increase is more significant than usual, reflecting weak economic conditions. The seasonally-adjusted unemployment rate remains at 6%, approaching levels seen during the early pandemic phase. Germany's economy has been struggling, particularly due to the energy crisis exacerbated by the Ukraine conflict, leading to a contraction in GDP. In the second quarter of 2024, the economy contracted by 0.1% compared to both the previous quarter and the same period last year. Despite the downturn, many companies have retained their workforce, suggesting they may prefer to utilize existing employees when economic activity resumes rather than hiring new staff. Additionally, inflation has risen by 0.3% month-over-month, the highest increase in three months, further complicating the economic landscape. The combination of rising unemployment and inflation indicates ongoing challenges for Germany's economy, which has been labeled the "sick man of Europe" due to its poor growth performance.