DAX: Unemployment Number Better than Forecasts – Index Languishes
Unemployment for December showed a larger increase from last month, denting yesterday’s positive start to the year.
- Unemployment increased by 10,000 in December
- Political concerns still weigh as nation faces elections in February
- Index remains in a consolidation pattern
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The DAX opened up 0.20% this morning before turning south as unemployment figures confirm the ongoing weakness of the German economy.
Unemployment Data
Today’s data from the Labor Office showed an increase of 10,000 unemployed in December. The consensus forecast was for an increase of 15,000, but the number is still larger than November at 7,000.
For 2024, the total unemployment percentage edged up to 6.1%, compared to 5.7% for 2023. The trend has been on the rise since mid-2022 when the unemployment ratee was 5%. And is approaching the pandemic period rate of 6.4%.
Analysts are expecting the unemployment rate to continue higher in 2025 given the weak economic outlook.
Job openings in December were also lower by 59,000 compared to the same month in 2023. An indication of contracting economic activity.
DAX live Chart
Political Turmoil
The German political situation is also a concern summed to the weak economic output. The nations faces general elections on February 23, with no clear winner in the polls so far.
Immigration and economic performance are top concerns, and the political spectrum is fragmented. These two aspects are on the top of each party’s list, but the policies are disparagingly different.
Elon Musk broke onto the scene, writing a piece for a German newspaper in support of AfD (Alternative for Germany). The party is considered far-right, but Musk stated his view that the party understood what was needed to make Germany an economic powerhouse again.
Daily DAX Chart
The chart above for the DAX shows a market still in a bullish trend above the Ichimoku cloud. Despite a sharp retracement from the all-time high of 20,531 on December 13.
The market has been in a sideways trend over the past 5 trading sessions (blue area). This area has appeared on an important support level of 19,681 (blue line), which corresponds to a previous all-time high.
We will need to see a close above or below the sideways formation to determine the next most likely direction. If the support of 19,681 breaks, we can expect further downside action towards 18,994 (red line).
Usually, the cloud acts as support but in this it’s particularly thin, meaning that it will offer very little support.
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