By: Dr. Mike Campbell
In any recession, unemployment lags the down-turn. Employers don’t down-size until they see they have no option and then will not re-engage staff until they are confident that their order book is healthy enough to merit it. In global terms, the recovery from the global financial crisis has been, and continues to be, weak. The data is often contradictory and can only really be judged with the perspective of time.
So today’s news that German unemployment has dipped below the 3 million mark makes for pleasant reading. Any reduction in unemployment (unless one achieved by massaging the data) is welcome news.
But the German data is particularly important because the last time that fewer than 3 million Germans were out of work was 1992, well before the global financial crisis. Simply put, more Germans are now in work than before the global recession hit, so by this measure, the recession in Germany can truly be said to have ended.
Bank of Japan Keeps Rate on Hold
The Bank of Japan has decided to continue with its recently renewed policy of holding key interest rates between 0 and 0.1% in a bid to stimulate its economy. The Bank has decided to bring forward its next scheduled meeting by ten days such that it will be able to respond to moves made by the US Federal Reserve when it next makes its policy statement (early next month).
It is widely anticipated that the Federal Reserve will announce a fresh round of quantitative easing in a bid to kick-start the faltering US recovery. If this happens, it is likely to cause the Greenback to depreciate still further. Japan’s exports continue to be under pressure because of the high Yen (particularly against the Dollar).