The strong upturn in the German labor market continues unabated. Seasonally adjusted, the number of unemployed fell by -22,000 in February compared with the previous month. Since September 2017, labor market dynamics have noticeably increased. Between September 2017 and February 2018, the cumulative number of unemployed fell by -134,000. By way of comparison: in the previous six-month period, the decline amounted to just -66,000. We interpret the recent setback in sentiment surveys such as the Ifo Business Climate Index as a normalization, which was already overdue in view of increasing euphoria. In our view, this is not the beginning of an economic downturn. For the rest of the year, we anticipate a sustained upward trend in the labor market. However, employment growth is likely to slow down somewhat as a result of a slower expansion of labor supply and increasing bottlenecks in various sectors. We expect the average number of employees to increase by almost +600,000 in 2018, compared with more than +650,000 last year. The decline in the number of unemployed, which amounted to almost -160,000 in 2017, is expected to continue at about the same magnitude in 2018.