German companies continue to cut jobs as employment barometer declines

German businesses are continuing to reduce their workforce, with the ifo Institute’s employment barometer dropping slightly to 93 points in February from 93.4 points in January. Despite a modest upward trend in the German Institute for Economic Research’s (DIW Berlin) economic barometer, which rose to 90.4 points, the labour market remains under pressure.

Job Cuts in Key Sectors

The industrial sector faces particularly severe job reductions, even as its employment barometer showed a slight increase in February. Service providers are also scaling back their workforce planning, with IT service companies making significant reductions. Meanwhile, the retail sector continues to struggle, according to the ifo Institute.

The Institute for Employment Research (IAB) also highlighted concerns over the weakening labour market. Its labour market barometer declined for the sixth consecutive month in February, dropping by 0.4 points to 98.3 points.

Unemployment Expected to Rise

Despite a slight increase in the European Labour Market Barometer to 99.5 points in February—the first rise in five months—experts remain cautious. Enzo Weber, an analyst at IAB, warned that unemployment is likely to increase while overall employment levels stagnate.

“The outlook is clearly negative,” Weber stated, pointing to the fact that the employment component of the IAB index has fallen below the neutral 100-point mark for the first time outside of the COVID-19 pandemic. In February, it dropped by 0.4 points to 99.9.

While DIW Berlin suggests that domestic demand may provide a modest boost to the economy, declining exports during the winter months are seen as a worrying sign. However, the institute notes that some degree of stabilisation may be emerging in the labour market.