Germany's Jobless Rate Surges to 12-Year High

(MENAFN) Germany's unemployment has surged to its highest level in over a decade, according to official data unveiled Friday, as Europe's largest economy teeters on the brink of an unprecedented third straight year of economic contraction.

The Federal Employment Agency (BA) reported a sharp jump of 177,000 unemployed workers in January compared to December, pushing the nationwide total beyond 3 million. Without seasonal adjustments, the unemployment rate spiked 0.4 percentage points to reach 6.6%.

BA chief Andrea Nahles acknowledged the deteriorating conditions, stating, "There is currently little momentum in the labor market," while pointing to persistent corporate hesitation driven by sluggish expansion and broader economic volatility.

Flash data from S&P Global's Purchasing Managers Index (PMI) revealed modest improvement in Germany's private-sector activity during January, yet manufacturing output continued its decline as workforce reductions intensified.

The nation's economic turmoil follows back-to-back recessions throughout 2023 and 2024, coupled with virtual stagnation in 2025. Just days ago, Berlin slashed its projections for 2026 and 2027, acknowledging that fiscal interventions have failed to ignite recovery at expected speeds. Economy Minister Katherina Reiche emphasized the need to embrace fresh "growth engines," declaring that conventional export advantages "no longer carry our growth."

Compounding the downturn are elevated energy expenses stemming from the EU's dramatic reduction of affordable Russian pipeline gas imports after the Ukraine conflict intensified in 2022. This strategic shift unleashed an energy emergency across the bloc, catapulting wholesale power costs upward, squeezing household budgets, and undermining industrial competitiveness for manufacturing powerhouses like Germany.

Economic experts have cautioned that Berlin's massive €1 trillion ($1.2 trillion) infrastructure and defense spending blueprint—part of widespread militarization efforts throughout the EU—may impose additional strain on the faltering economy.

The German Economic Institute characterized the current situation as a state of "shock" in recent projections, attributing the crisis to diminished international demand, elevated borrowing costs, and an extended energy emergency.

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