April 30, 2020 / 6:51 AM / a month ago

Coronavirus lockdown hits German jobs, retail sales

BERLIN (Reuters) - German unemployment soared in April, while monthly retail sales declined last month at their fastest rate in 13 years, as the coronavirus lockdown hit Europe’s biggest economy hard.

Germany is braced for its deepest recession since World War Two, the economy minister has warned, as the shutdown has shuttered many shops, businesses and factories, although a gradual easing of restrictions has started.

The number of people out of work in Germany saw a record increase in April, rising by 373,000 to 2.639 million, Labour Office data showed. That took the unemployment rate to 5.8% from a seasonally adjusted 5.0% a month earlier.

Data from the Statistics office showed retail sales falling by 5.6 percent on the month in March, which was nevertheless a smaller drop than an analysts’ forecast for a 7.3% decline. They dipped by 2.8% on the year.

Retail sales, a notoriously volatile indicator, had surged in February as households stockpiled before the lockdown.

The Statistics Office said higher sales in supermarkets and chemists, which remained open during the shutdown, offset some of the losses elsewhere.

On Wednesday, the government said it expected the economy to shrink by 6.3% this year, cutting its January forecast of 1.1% growth. It expects the recession to bottom out in the second quarter and economic activity to pick up again after that, provided a second wave of infections can be avoided.

Some shops re-opened last week and the government is trying to cushion the economic blow with a range of measures, including a 750 billion euro stimulus package.

One of the schemes the government is counting on is short-time work, a form of state aid that allows employers to switch employees to shorter working hours during an economic downturn to keep them on the payroll.

Labour Minister Hubertus Heil said millions of jobs would be saved by the initiative and that he expected more people to use it than in the 2008-09 financial crisis. In 2009, applications for 3.3 million people were made, the Labour Office said.

“There will be people who are in short-time work for a very long time,” Heil told N-TV, adding it was expensive for the state, but less costly than unemployment.

The head of the Labour Office said he expected to use reserves of about 26 billion euros this year for the scheme, adding that because the scheme was working, redundancies would not be widespread.

Some 751,000 requests for short-time work for a total of 10.1 million people were made in March and until April 26 though not all of those will end up on the short-time work scheme.

Reporting by Madeline Chambers and Michelle Martin; Editing by Alex Richardson

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