Germany's labour market outlook in spotlight as institutes disagree

The state of Germany's labour market is a source of contention, with two leading economic institutes providing differing assessments on Wednesday.

The Munich-based ifo Institute said its employment barometer slipped back to its weakest level since mid-2020 in November, falling by one point to a seasonally adjusted 92.5 points.

The index last hit this level in September but has not been lower since the coronavirus pandemic.

"Many companies are continuing to cut jobs," said Klaus Wohlrabe, head of ifo surveys. "Due to the faltering economy, the labour market remains weak."

In contrast, the Institute for Employment Research (IAB), based in Nuremberg, presented a rosier picture of developments.

The IAB employment barometer rose by 0.1 point to 100.4, a more positive figure than in large parts of the previous two years.

"The outlook for the labour market remains fair to cloudy," said IAB researcher Enzo Weber.

The reason for the disparity could be tied to differing reporting methods between the two barometers. While ifo surveys companies, the IAB relies on data from local employment agencies.

The Federal Employment Agency is due to release its November labour figures on Friday.

Ifo: Job cuts across all sectors

The ifo barometer was particularly low in the manufacturing sector, with an index of -20.9, but the institute said job cuts were visible across nearly all sectors.

In the retail sector, the barometer was at -14.4, with many companies planning to run the Christmas season with fewer employees.

The index fell particularly sharply in the service sector, dropping by 4.2 points from the previous month, as the hospitality industry plans further job cuts.

However, the construction sector provided some good news, rising to 4.5 points - its highest level since May 2022.