Bleak outlook for the German labor market: The number of jobs advertised on the job platform Indeed fell by 0.9 percent in January compared to the previous month and is now at its lowest level since August 2021. The IAB labor market barometer fell for the fifth time in a row to its lowest level outside of 2020.
While the decline in job postings on Indeed during the winter is partly seasonal, the year-over-year comparison is especially alarming: All 25 job categories analyzed show a decline compared to January 2024 – even in industries with an acute shortage of skilled workers.
The situation in industry is bleak. For example, demand for workers in production and manufacturing fell by 19.85 percent year-on-year, and by 13.81 percent in mechanical engineering.
According to Indeed, the decline in demand for office staff is even more drastic than in industry. Compared to the previous year, job offers in the areas of IT support and IT infrastructure fell by 24.05 percent, in customer service by 26.46 percent, in project management by 31.78 percent and in software development by as much as 32.67 percent.
Even in occupational fields that are characterized by a persistent shortage of skilled workers, the number of job ads has shrunk year-on-year, for example in nursing (-4.03 percent) or in education and child care (-6.57 percent).
“The widespread decline in demand for personnel makes it clear that Germany is facing significant economic challenges. In particular, however, we are also seeing structural job cuts in industry, which will have long-term effects on the entire labor market. It is also true that we still have around a 30 percent higher number of job openings than before the pandemic. However, this margin is currently shrinking month by month,” explains Virginia Sondergeld, labor market expert and economist at Indeed.
ifo Institute: Industrial Companies Continuing to Cut Jobs
Almost all branches of industry in Germany want to reduce their headcount. In the economy as a whole, companies in Germany are somewhat less restrictive in their personnel planning, which was attributable to the service sector. The ifo Employment Barometer rose to 93.4 points in January, up from 92.4 points in December.
“The situation on the labor market remains tense,” says Klaus Wohlrabe, Head of Surveys at ifo. “There is still a tendency for companies to reduce their workforce.”

Downward Trend: IAB Labor Market Barometer
The IAB labor market barometer fell for the fifth time in a row to its lowest level outside of 2020. The leading indicator of the Institute for Employment Research (IAB) lost 0.4 points in January to stand at 98.8 points. The European Labor Market Barometer also fell, recording 99.2 points in January.
Both components of the IAB Labor Market Barometer fell in January. The component used to predict unemployment in Germany fell by 0.5 points compared to the previous month and is thus clearly in negative territory at 97.0 points.

“The labor market is not looking good. Unemployment is rising for the third year in a row,” reports Enzo Weber, head of the ‘Forecasts and Macroeconomic Analyses’ research department at the IAB. The employment component also fell by 0.4 points to 100.5 points, and is thus only slightly above the neutral mark of 100 points.
“We have record employment, but the trend has flattened out. The labor market will only get back on the road to success with positive economic development prospects in the transformation,” explains Weber.
The European Labor Market Barometer fell by 0.2 points to 99.2 points in January compared with the previous month. The leading indicator of the European Network of Public Employment Services and the IAB has thus been below the neutral mark of 100 points for 1.5 years now. “The gloomy outlook is currently hanging over the European labor markets like a lead cloud,” said Weber.
Data basis
The IAB labor market barometer is a leading indicator that has existed since November 2008 and is based on a monthly survey conducted by the German Federal Employment Agency among all local employment agencies.
The European Labor Market Barometer is a monthly leading indicator based on a survey conducted jointly by the 16 employment services and the IAB among local or regional employment agencies in the participating countries since June 2018. These include: Austria, Belgium (German-speaking community, Wallonia), Bulgaria, Cyprus, Denmark, Germany, Iceland, Liechtenstein, Lithuania, Luxembourg, Malta, Poland, Portugal, Sweden, Switzerland.

While component A of the IAB labor market barometer and the European labor market barometer forecasts the development of seasonally adjusted unemployment figures for the next three months, component B serves to predict the development of employment. The mean of these two components, “unemployment” and “employment”, forms the total value of the two barometers. This indicator thus provides an outlook on the overall development of the labor market.
As the seasonal adjustment procedure is constantly learning from past developments, there may be subsequent revisions. The European Labor Market Barometer is seasonally adjusted for the first time this month, when the time series has become sufficiently long. The barometer ranges from 90 (very poor development) to 110 (very good development).

2025 – yet another crisis year?
Peter Adrian, President of the German Chamber of Industry and Commerce (DIHK), is anything but optimistic about Germany’s economic prospects:
“After two years of recession, the federal government has now significantly lowered its forecast for the current year,” Adrian said. It is now only expecting ‘extremely weak growth’. What’s more, ”based on the latest feedback from companies, we estimate that 2025 could even be the third consecutive year without growth. That would be a sad first in Germany’s post-war history.”
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