Germany's economy grew by more than expected in the first quarter of 2026 despite the shock to energy prices from the war in Iran, but unemployment rose above the 3 million mark in April.
Gross domestic product expanded by 0.3% in the first quarter compared with the previous three-month period, preliminary data from the statistics office showed today, with household consumption and government spending the main drivers. Exports were also up.
Analysts polled by Reuters had forecast a rise of 0.2%.
Despite exceeding expectations in the first quarter of this year, growth in the final three months of 2025 was revised down to 0.2% from 0.3% previously.
Europe's largest economy has struggled to regain momentum since the Covid-19 pandemic, as rising competition from China and higher energy prices have strained its export-driven model.
The surge in energy prices triggered by the Iran war now poses a further threat to its long-awaited recovery.
German EU-harmonised inflation rose to 2.9% in April due to the rising cost of energy, data showed earlier this week.
The German government has already accounted for the energy shock in its economic forecasts, halving its growth forecast for 2026 to just 0.5% and predicting inflation to accelerate to 2.7% this year and 2.8% in 2027, compared with 2.2% last year.
German unemployment rises above three million mark
Despite growth holding up, the number of unemployed people in Germany rose by more than expected in April and surpassed the politically important 3 million mark in seasonally adjusted terms.
The jobless figure rose a seasonally adjusted 20,000 to 3.006 million, labour office figures showed. Analysts and economists had predicted an increase of 4,000 in a Reuters poll.
"There is still no sign of a turnaround in the labour market," labour office head Andrea Nahles said in a statement. "The spring upturn remains weak in April as well."
The seasonally adjusted jobless rate stood at 6.4%, unchanged from the previous month.
In unadjusted terms, a total of 3.008 million people were unemployed in April, a decrease of 13,000 from the previous month but marking the fourth consecutive month that the absolute number of jobless remained above the 3 million mark.
In total, 641,000 job openings were registered with the labour office in April, 5,000 fewer than a year ago.
