German Unemployment At Highest Level In More Than 10 Years

By Carsten Brzeski of Think.ING

Friday, August 29, 2025 6:30 AM EST

Stock, Trading, Monitor, Business, Finance, Exchange

Image source: Pixabay

The number of unemployed people has increased above the three-million mark for the first time since 2015, providing further evidence that a long period of economic stagnation eventually takes a toll on the labor market.

In Germany, three million is not just a number. In the context of the labor market, it represents a symbolic threshold - one that separates strength from weakness. Although this benchmark is entirely arbitrary, today’s labor market data will probably leave a larger mark on the public debate than the trend of the last few years. According to the just-released data, German unemployment rose by 45,700, bringing the unemployment figure to 3.025 million, the highest level since early 2015. Seasonally-adjusted unemployment dropped by 9,000, keeping the unemployment rate unchanged at 6.3%.

Despite the symbolic weight of the three-million mark, the deterioration of the German labor market is not a sudden development but part of a longer trend. Since reaching a low of 2.2 million in May 2022, the number of unemployed has steadily increased. This trajectory reflects textbook economics: with the economy effectively stagnating for over five years and industry facing severe structural challenges, a worsening of the labor market was just a matter of time.

Things will get worse before they get better

Looking ahead, the tentative signs of a bottoming out of the labor market have given way to a more pessimistic outlook. At least in the short run. After some improvements in the spring, recruitment plans in both industry and services have moved sideways, and the number of vacancies is still dropping. However, a few indicators, like the labor agency’s own sentiment indicator and social media hiring indicators, do at least point to some bottoming out. At the same time, ongoing announcements of potential cost-cutting measures in the automotive and other industries, and the continuing increase in the number of bankruptcies, suggest that things could get worse before they get better.

To be clear, the demographic impact on the labor market and ongoing labor shortages should prevent a sharp worsening, and the market remains far from revisiting the symbolic - and once alarming - milestone of five million unemployed, a figure that triggered the economic reform agenda of the early 2000s. Still, even if the increase in the number of unemployed remains gradual, the risk of an underlying loss in disposable income and broader economic prosperity is high.

More By This Author:

ECB July Minutes Confirm Wait-And-See Stance With Some Easing Bias
German Businesses Accentuate The Positives
Germany’s Economic Slump Worsened In The Second Quarter

Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. ING forms part of ING Group (being for this purpose ING Group NV and its subsidiary and affiliated companies). The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.

The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.

Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved. ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam). In the United Kingdom this information is approved and/or communicated by ING Bank N.V., London Branch. ING Bank N.V., London Branch is deemed authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.. ING Bank N.V., London branch is registered in England (Registration number BR000341) at 8-10 Moorgate, London EC2 6DA. For US Investors: Any person wishing to discuss this report or effect transactions in any security discussed herein should contact ING Financial Markets LLC, which is a member of the NYSE, FINRA and SIPC and part of ING, and which has accepted responsibility for the distribution of this report in the United States under applicable requirements.

less

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.