German unemployment falls to new post-unification low

AFP , Tuesday 31 Mar 2015

German unemployment fell in March to the lowest level since the country reunited in 1990 as the recovery in Europe's biggest economy continues to pick up speed, data showed on Tuesday.

The number of people registered as unemployed in Germany fell by a seasonally-adjusted 15,000 to 2.798 million in February, the Federal Labour Office said.

That was steeper than expected, as analysts had been pencilling in a decline of around 10,000.

The unemployment rate -- which measures the jobless total against the working population as a whole -- slipped to 6.4 percent in March from 6.5 percent in February, also the lowest level since west and east Germany reunited in 1990 after the fall of the Berlin Wall the previous year.

In raw or unadjusted terms, the jobless total decreased by 85,500 to 2.932 million and the jobless rate eased to 6.8 percent in March from 6.9 percent in February, the labour office said.

Normally, unemployment declines in the spring as the warmer weather allows companies in sectors such as construction to take on workers.

But the current strength of the economic recovery in Germany was magnifying that effect, the labour office said.

"The labour market developed positively both on the supply and demand side," it said.

"The employment trend remains pointing firmly upwards. And usual spring upturn that begins in March was stronger than usual," it added.

German gross domestic product (GDP) expanded by 0.7 percent in the fourth quarter of last year, fuelled primarily by consumer spending and exports, but also by construction investment and experts expect the recovery to gather momentum this year.

"Early indicators point to an overall favourable development in 2015," the labour office said.

"The labour market is in good shape and is benefitting from strong economic growth," said labour minister Andrea Nahles. "Wages are rising and giving private consumption a boost."

Berenberg Bank economist Christian Schulz attributed the steeper-than-expected drop in joblessness to "firming economic growth and moderate wage gains. The job market has returned to full throttle growth in early 2015."

BayernLB economist Christiane von Berg noted that the national minimum wage introduced in Germany at the start of the year "has so far not had any negative effect on the official data."

She suggested that the comparatively mild weather at the turn of the year might have offset any negative effects from the minimum wage.

But with early indicators all pointing upwards, the outlook for the labour market "remains positive," the expert said.

Postbank economist Thilo Heidrich agreed.

"We expect the positive trend to continue, even if not at the same speed," he said.

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