Germany’s labor market is showing signs of stabilization and potential modest growth, according to the latest data released Wednesday by the Institute for Employment Research (IAB). The IAB’s labor market barometer registered an increase of 0.7 points in August 2025, reaching 100.7 points and entering positive territory.
The indicator’s unemployment expectation component saw a second consecutive notable rise, increasing by 0.9 points to 100.5 points – a cumulative increase of nearly four points since March 2025. Enzo Weber, head of the IAB’s forecasting and macroeconomic analysis department, stated this signals that employment agencies are now anticipating an end to the recent upward trend in unemployment.
Alongside this, the employment component climbed 0.5 points to 100.9, indicating a potential acceleration in employment growth. Weber noted, however, that the industrial sector continues to face pressures.
In contrast to the improving German outlook, the European labor market remains largely stagnant. The European Labour Market Barometer held steady at 99.7 points in August, marking its fourth consecutive month at that level. This suggests a mildly pessimistic forecast for the European job market. Weber commented that without broader economic impetus, European labor markets are likely to remain subdued.
The data reveals that Germany’s labor market performance has outpaced European trends for the past two months, suggesting diverging economic pathways.