In September, Germany's labour market showed clear signs of continued strain as unemployment rose for the 21st consecutive month, keeping the unemployment rate steady at 6.0 percent. This sustained increase in unemployment, coupled with a decrease in job vacancies, down by 1,000 in September after a 10,000 drop in August, highlights a concerning trend of weakening demand for new hires.

These figures suggest that the German economy is facing significant challenges. The persistent rise in unemployment may point to broader economic issues such as slowing growth. The decline in job vacancies indicates that companies are cautious about expanding their workforce, potentially due to declining business confidence.

For the German economy, these developments could imply slower consumer spending, as higher unemployment often leads to reduced household income and spending power. Additionally, a less dynamic labour market might affect overall economic productivity and growth, creating a challenging environment for policymakers. Addressing these labour market issues will be crucial to bolstering economic resilience and ensuring sustainable recovery in the months ahead.

September's unemployment rate is expected to rise 1 tenth to 6.1 percent. Despite a steady unemployment rate, the number of unemployed has been on the rise and job vacancies have been on the decline.

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.