German unemployment rose in March, Labour Office figures showed on Friday, as economic headwinds delayed a seasonal pick-up in hiring for the spring.
The Federal Labour Office said the number of people out of work increased by 16,000 in seasonally adjusted terms to 2.54 million. Analysts polled by Reuters had expected that figure to remain unchanged.
The seasonally adjusted jobless rate grew by 0.1 percentage points to 5.6%.
"The labour market remained robust overall in March. However, the weak economy is leaving its mark," said Labour Office head Andrea Nahles.
Workers are increasing their wage demands and gaining bargaining power in an extremely tight labour market. Wage negotiations for Germany's public sector failed to yield agreement this week although employers offered almost 6% pay growth per year for 2023 and 2024.
"The unions are in a strong position, so we still assume that the eventual deal will be more front-loaded," Citi economist Christian Schulz said.
This is spurring fears of a wage-price spiral that could lead to a revival of inflation following some recent easing.
German consumer prices, harmonised to compare with other European Union countries, rose by an annual
7.8% in March
, the lowest rate since April 2022.
In March, there were 777,000 job openings, 62,000 fewer than a year ago. Although the Federal Labour Office notices a slowdown in labour demand since the summer of 2022, demand remains at a high level. (Reporting by Holger Hansen, Rachel More and Maria Martinez Editing by Peter Graff)