German unemployment rose nearly twice as much as forecast in January as an economic slump sparked by the global financial crisis spread to industries from cars to software.
The number of people out of work rose in seasonally adjusted terms by 56,000 to 3.27 million, the Nuremberg-based Federal Labour Agency said today.
Economists forecast an increase of 30,000, according to the median of 33 estimates in a Bloomberg News survey.
The adjusted jobless rate rose to 7.8 per cent from 7.7 per cent. In unadjusted terms, the number of jobless increased by 387,000.
"We've reached the turning point on the labour market," Rainer Guntermann, an economist at Dresdner Kleinwort in Frankfurt, said in an interview.
"Sooner or later, we'll see major restructuring programs and job cuts." The jobless rate will probably climb gradually to 9 per cent by 2010, he said.
Companies as diverse as clothing manufacturer Hugo Boss AG, software maker SAP AG and Europe's biggest engineering company, Siemens AG, said they will cut jobs or put workers on short time as orders dried up this month.
The jobless total will rise by an average 250,000 this year as the economy shrinks by 2.25 per cent, a postwar record, the government said on January 21st.
German companies that pushed the jobless rate over three years to a 16 year-low by November are "frozen in shock" by the crisis and are only now beginning to eliminate jobs, Mr Guntermann said.
Bloomberg