Today may be the final snorefest before tomorrow Uncle Ben Chairsatan disappoints everyone (sending the market even higher on hopes and prayers he is really saving the super-duper nitrous turbo bazooka for the Sept 13 FOMC meeting) with nothing actionable coming through the J-Hole teleprompter, but that doesn't mean the day has to be boring. Luckily, Goldman has made sure of just that with a report on the surprising higher than expected rise in German unemployment, which coupled with yesterday's higher than expected inflation in Deutschland (they didn't build that inflation, someone else did it for them) is certain to get all ze Germans in a very bailouty moody. However, this being Goldman: the bank that runs the ECB, the Fed, the BOC, and soon, if all goes according to plan, the BOE, the base coverage is enough to make one's head spin. To wit: 'Unemployment edges higher, but employment continues to rise." In other words, add both German employment and unemployment to that other list of items that just goes up come hell or high water, such as stocks, bonds, VIX, crude, gold, blood pressure, coffee consumption, and so forth. Why, one may ask? Simple - "the new central-planned normal." Which of course is the same as the old central-planned normal from circa 1954 Stalingrad.
From Goldman Sachs
Unemployment edges higher, but employment continues to rise
Bottom line: Unemployment continued to edge higher in August. Employment, however, is still rising, albeit at a slower pace, suggesting that companies are becoming more reluctant to create jobs.
Unemployment (seasonally and calendar adjusted) rose 9,000 in August after a similar increase in July. At the same time, employment increased by 16,000 in July after +25,000 in June. The unemployment rate remained constant at 6.8%; the unemployment rate according to the ILO definition was also unchanged at 5.5%.
The slowdown in the economy is starting to affect the labour market, as reflected in the rate at which new jobs are being created: the average rise in employment was only 30k in the second quarter, after +46k in Q1. It has now slowed further to just +16k in July (latest data available). To be sure, the lack of skilled labour may in some regions also be a factor leading to the slowdown in employment growth, with unemployment rates in Southern Germany remaining well below 4%.
Overall, the labour market continues to support growth for the time being. A weaker underlying momentum of the German economy will lead, we think, to a more pronounced slowdown in job creation. At the same time, there is no indication so far that the latest developments at the European level have led to a fundamental reassessment of the medium-term outlook for German corporates.
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