Labour Market Report for July 2025: Unemployment Surge Primarily Attributed to Seasonal Fluctuations (Federal Labour Agency)
German Labor Market Shows Resilience Amid Seasonal Unemployment Increase
In July 2025, the unemployment rate in Germany remained steady at 6.3%, despite a slight increase of about 2,000 persons compared to the previous month. This rise is smaller than anticipated and reflects a relatively stable labor market.
The increase in unemployment during July can be partly attributed to the start of the summer break, a seasonal effect. During this period, some temporary or seasonal workers, such as students and school leavers, may finish their summer jobs, causing a brief and small uptick in unemployment. However, this seasonal impact is limited, and the overall job market shows resilience despite economic headwinds.
Key context includes:
- The German labor market demonstrates resilience with ongoing labor shortages in key sectors like manufacturing, logistics, and services, which puts upward pressure on wages and supports consumption.
- Employment levels in the second quarter of 2025 were almost unchanged after seasonal adjustment, indicating stability going into July.
- The Federal Employment Agency data shows that although unemployment in July increased by 2,000, this is a very moderate rise compared to expectations and previous months, signaling manageable labor market conditions.
- Economists forecast a slight rise in the unemployment rate to 6.4% by the end of the third quarter, reflecting normal seasonal fluctuations and broader economic factors.
In addition to the unemployment rate, other indicators paint a mixed picture. The BA-X index, an indicator of the demand for personnel in Germany, decreased in July 2025 by 1 point to 98 points. Social security-covered employment decreased by 16,000 from April to May 2025, and underemployment, which refers to people working fewer hours than they would like, increased by 31,000 compared to a year ago.
However, the training market remains dynamic, with the numbers of unfilled training positions and job seekers without a position expected to decrease significantly over the summer months. Additionally, the number of short-time work benefits paid for employees decreased by 12,000 in May 2025 compared to the previous month, but was 27,000 more than in May of the previous year.
In July 2025, 628,000 jobs were reported to the BA, 75,000 fewer than a year ago. Underemployment decreased by 10,000 compared to the previous month. The number of employed persons (according to the domestic concept) decreased by 19,000 compared to the previous month in June 2025, and is 9,000 lower compared to the previous year.
Despite these fluctuations, the German labor market remains robust overall, with ongoing labor shortages in key sectors putting upward pressure on wages and supporting consumption. The modest rise in unemployment during July is a seasonal and temporary phenomenon related to the end of short-term employment for students and temporary workers.
- Despite the seasonal increase in unemployment during July, driven by the end of short-term employment for students and temporary workers, the overall job market in Germany shows resilience, as indicated by ongoing labor shortages in key sectors like finance, business, and education.
- The training market remains dynamic, with the numbers of unfilled training positions and job seekers without a position expected to decrease significantly over the summer months, suggesting a continued demand for skilled workers in various sectors, including finance, business, and education.
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