German Unemployment Rate - Economic Data Preview

Germany’s labor market is expected to deteriorate in June, with expectations calling for the Euro Zone’s largest economy to shed 45k jobs to push the [B]Unemployment Rate[/B] back to a 16-month high at 8.3% after the metric slipped to 8.2% in the previous month. Job losses will weigh on consumer spending, the largest contributor to overall economic growth, keeping a lid on any substantive recovery in GDP growth in the months ahead. Indeed, the latest OECD forecast calls for output to shrink by a whopping -6.1% this year. The prospect of deepening recession and an increasingly credible deflationary threat has boosted expectations that the European Central Bank will cut interest rates later this week, with overnight index swaps suggesting the market now sees a 56.5% chance of a 0.25% reduction.