While other developed economies seem to be having a hard time finding sustained growth, German macro numbers are coming in at record or near-record levels in a “virtuous cycle” effect.
The raw number of people looking for work in the country has dropped to 3.14 million, fewer than at any point since late 1992, when German businesses were working to absorb the labor force of the former East Germany. The unemployment rate remains at 7.5%.
Consensus was for the country to create a slightly smaller number of jobs, but any way you slice it, the split between Germany — powering ahead as one of the best economies in the developed world — and the debt-choked nations of the euro periphery is huge.
As just about everyone else in Europe seems to be cutting salaries and hiring plans in order to achieve their various austerity targets, German companies are ramping up their payrolls in order to meet both foreign and domestic demand.
In fact, the closely watched Ifo survey of German business confidence came in at a record high last quarter, revealing that despite gloom elsewhere, these companies are doing well. This may help lead the rest of the euro zone out of the doldrums, or else the disparity between a resurgent core and stumbling periphery could heap added strain on the European Union.
The effects on the euro so far are ambivalent as well.