07:05 AM EDT, 05/28/2025 (MT Newswires) -- German unemployment rose by 33,000 in May, increasing the unemployment figure to 2.963 million, noted ING following Wednesday's data.

It's the highest May number since 2010, noted the bank in a note. Two years ago, there were 500,000 fewer people unemployed. Seasonally-adjusted unemployment increased by 34,000, keeping the unemployment rate unchanged at 6.3%.

The German labor market has been in a very gradual soft landing since 2022. While the number of unemployed has increased from 2.2 million in May 2022 back to almost 3 million again currently, the number of vacancies has come down since late 2021.

The fact that, until recently, employment was at record highs can be explained by migration flows, stated ING. However, the rise in employment hasn't been enough to prevent the current private consumption slump. The reason is that a large part of the recent job growth took place in part-time and low-wage jobs.

Looking ahead, there are tentative signs of a bottoming out of the labor market, pointed out the bank. Recruitment plans in both industry and services have improved somewhat over the last two months, and several vacancy indicators also point to a tentative end to the downward trend.

At the same time, ongoing announcements of potential cost-cutting measures in the automotive and other industries and the continuing increase in the number of bankruptcies are a strong warning against premature celebration, it added.

On a more positive note, the demographic impact on the labor market and labor shortages should prevent a sharp worsening, noted ING. Still, even if the increase in the number of unemployed is gradual, the risk of an underlying loss in disposable income and broader economic prosperity is high.

Overall, the German labor market's gradual turn continues, and it shows that restoring private consumption to the German economy won't be easy, according to the bank.