German unemployment soared in April, while the Eurozone economy contracts the quickest on record as coronavirus lockdowns inflict severe economic damage across the continent.
Germany, the world's fourth-largest economy and Europe's largest, experienced a sharp increase in the number of people out of work in April, rising by 373,000 to 2.639 million, the Federal Labor Office reported on Thursday (April 30). The forecast among 20 economists was between 10,000 and 350,000, which over exceeded their expectations. The result was a bump higher in the unemployment rate to 5.8% from 5.0% in March, reported Reuters.
Reuters' Riham Alkousaa tweeted, "So 10.1 mln people on short-time work in Germany, 373,000 more unemployed in April and the unemployment rate is now 5.8% from previous 5.0% The virus is taking its toll on the German job market."
So 10.1 mln people on short-time work in #Germany, 373,000 more unemployed in April and the unemployment rate is now 5.8% from previous 5.0%— Riham Alkousaa (@RihamKousa) April 30, 2020
The virus is taking its toll on the German job market
Data from the Federal Labor Office also showed a plunge in retail sales of 5.6% in March, which was a slightly smaller dip than what analysts were predicting around -7.3%. Retail sales have been widely depressed in the country since COVID-19 cases and deaths started to appear as early as February. The lockdowns, which began in mid-March, have taken a drastic economic toll on households as the economy grinds to a halt. Government data shows higher retail sales at supermarkets that offset some of the losses elsewhere.
The German economy is expected to contract 6.3% this year as a recession could trough in the second quarter and surge after lockdowns are lifted. Some businesses reopened last week, but threats of a second coronavirus wave have left much of the economy in economic paralysis.
For the continent, well, lockdowns have led to the fastest rate of economic decline on record. Eurozone GDP for the first quarter fell by 3.8% compared with the previous quarter. This is the most significant collapse in economic growth since the data series began in 1995.
Jessica Hinds, a European economist at Capital Economics, suggests the plunge in economic activity is not over. She said the first quarter "will pale in comparison with the complete collapse that will surely be recorded in Q2." Meanwhile, stocks around the world have been rallying as if the crisis is over, even though the economic damage is only starting to be realized.