(Bloomberg) -- German unemployment increased less than expected in December — a sign that companies are hesitant to cut hard-to-come-by staff even during a recession.  

Joblessness rose by just 5,000 at the end of last year, compared with an estimate in a Bloomberg survey for a 20,000 gain. The unemployment rate ticked up to 5.9% from a revised 5.8%. 

The data come as Europe’s largest economy is weighed down by weak global demand, hesitant consumer spending and uncertain geopolitics. Output probably shrank in the fourth quarter, an outcome that would result in a recession following the downturn already recorded in the earlier three-month period.

A decline in business expectations as measured by the Ifo institute last month is damping hopes of an imminent rebound. Still, firms are thinking twice about letting workers go amid concerns that they’ll struggle to hire them back once demand picks up again.

Many companies are struggling to find staff, according to a recent survey, with recruitment problems most acute in manufacturing. 

“Long vacancy periods reflect the difficulties many firms face in finding suitable and skilled workers in a timely manner, despite increasing unemployment and underemployment,” the labor agency said in its report. 

While it sees no signs of a general shortage of workers, there are “clear tensions and bottlenecks” in certain professions.

That suggests the labor market won’t suddenly start to severely deteriorate.

“If we look back at 2023, we can see that the weak economy has left its mark on the labor market — however, considering the extent of the stress and uncertainty, the labor market is still holding up well,” agency chief Andrea Nahles said in a statement, pointing to record employment.

--With assistance from Kristian Siedenburg and Joel Rinneby.

(Updates with details from report starting in sixth paragraph.)

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