Germany adds to global job woes after Alcoa cuts

LONDON/BERLIN – Global job woes deepened yesterday as Germany reported its first rise in unemployment in almost three years, a day after US aluminium giant Alcoa said 15 000 jobs would go.

UK retailer Marks & Spencer posted its worst quarterly sales figures in a decade to add to the gloom in Europe, where Russia’s dispute with Ukraine over natural gas threatened shortages for homes and factories in eastern Europe.
German unemployment rose in December for the first time since February 2006, bringing to an end a three-year labour market boom as the global financial crisis hits companies in Europe’s largest economy.
The jobless figures, up by a bigger-than-expected 18 000 in seasonally adjusted terms, come as German lawmakers work on a second stimulus package expected next week that could total 50 billion euros ($67 billion).
‘How steep the rise in unemployment will be hinges largely on what the government agrees to do in its second stimulus package,’ said Joerg Lueschow, economist at WestLB.
Germany’s ruling coalition is also discussing support measures worth up to 100 billion euros for firms in financial trouble, the Financial Times Deutschland newspaper reported.
Alcoa’s job cuts, announced late on Tuesday, accompanied a plan to slash aluminium output by 18 per cent and came ahead of US employment numbers due on Friday which are expected to show half a million jobs were lost in December, pushing the 2008 total above 2,4 million.
More than 1 000 job cuts in the UK accompanied Marks & Spencer’s bleak quarterly report, which showed a 7,1 per cent fall in sales for the 125-year-old clothing, food and homewares group.
‘We expect challenging economic conditions to continue for at least the next 12 months,’ said Chairman Stuart Rose.

EURO ZONE PPI RECORD FALL

Euro zone producer prices released on Wednesday showed a record monthly fall in November thanks to a sharp drop in energy costs, firming the case for a deep European Central Bank (ECB) interest rate cut next week.
Prices at factory gates in the 15 countries using the euro currency fell 1,9 per cent month-on-month in their biggest fall since Eurostat’s PPI records began in 1981.
‘Given widespread evidence of sharply diminishing inflationary pressures and deepening euro zone recession, we believe there is a compelling case for the ECB to cut interest rates appreciably … at its 15 January policy meeting,’ said Howard Archer, economist at IHS Global Insight.
The Bank of England is also expected to cut rates by 50 basis points to a record low of 1,5 per cent on Thursday, according to economists polled by Reuters.
Both Indonesia and Taiwan announced interest rate cuts on Wednesday, while in Thailand the new government said it would retain most of the short-term stimulus measures of a previous administration.- Nampa-Reuters