The labour market lost further ground in November. A 22,000 increase in joblessness followed a marginally larger revised rise gain in October and was large enough to add a tick to the unemployment rate which, at 5.9 percent, was both above the market consensus and the highest since April 2021.

Vacancies also continued to drift lower, falling another 2,000 to match the previous period's drop and at 733,000, some 90,000 fewer than a year ago. The demand for labour is declining.

Today's report is consistent with a shrinking economy and boosts the likelihood of recession by year-end. Moreover, as yesterday's CPI report illustrated, the weakening labour market seems to be aiding the slowdown in inflation, which will sit very well with the ECB. The November data reduce the German RPI to minus 26 and the RPI-P to minus 14. While surprisingly weak prices are biasing down the former, the latter measure shows real economic activity is also falling short of market expectations.

November's unemployment rate is expected to hold steady at 5.8 percent, the highest rate since June 2021.

The unemployment rate is calculated by the Federal Employment Agency based on the number of unemployed persons as a percentage of the number of all civilian members of the labour force (dependant civilian employed persons, the self-employed family workers and unemployed). Unemployed is defined as persons who between the ages of 15 and 65 and who are without employment or only with short-time employment (currently less than 15 hours per week) and seeking an employment of at least 15 hours per week subject to compulsory insurance.

A snag to understanding German unemployment data comes from the fact that there are several measures of unemployment available. Unemployment rates calculated by the Bundesbank are preferred but some German analysts check the unadjusted rates as well. And then there are still different rates for unemployment that are used by Eurostat to compute their unemployment rate. The spread between the Bundesbank rates and Eurostat can be quite significant. The reason for the often sizeable differential is found in the interpretation of the ILO definition.

Unlike in the U.S. no wage data are included in this report. But by tracking the jobs data, investors can sense the degree of tightness in the job market. If labor markets are tight, investors will be alert to possible inflationary pressures that could exist. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.