Why Americans Should Worry About Weaker German Data
With the recent steps taken by the European Central Bank (ECB) to stem the financial crisis within the eurozone, the situation will get worse before it gets better, as I have stated several times. One of the concerns for investors is the possibility that the financial crisis could spread to the strong nations within the eurozone. It appears that this is indeed the case, as new data from Germany show that unemployment is rising at a much faster rate than anyone expected.
The seasonally adjusted number of people unemployed in Germany rose 20,000 in October, which was higher than the 10,000 expected from a Bloomberg survey. The unemployment rate also increased from a rate in August of 6.8% to 6.9% in both September and October. (Source: “German Jobs Machine Falters For First Time in Three Years,” Bloomberg, October 30, 2012.)
Many international investors have been hoping that the German economy would be able to withstand the financial crisis that is spreading from the weaker eurozone nations and would pull that union up out of its trough. It appears that the massive level of weakness is pulling down the strong nations within the eurozone.