German jobless rate drops more than expected
Updated: 2012-02-01 07:53
Experts 'optimistic' of country's prospects amid European crisis
BERLIN - German unemployment dropped more than economists forecast to a fresh two-decade low in January, bolstering economic growth as the region's fiscal crisis threatens to undermine export demand.
The number of people out of work fell a seasonally adjusted 34,000 to 2.85 million, the Nuremberg-based Federal Labor Agency said on Tuesday. That's the biggest drop since March.
Economists forecast a decline of 10,000, the median of 32 estimates in a Bloomberg News survey shows. The adjusted jobless rate slipped to 6.7 percent from 6.8 percent in December.
"The labor market is the main supporting pillar of the economy and the reason why we're relatively optimistic, at least for the second half of the year," said Jana Meier, an economist at HSBC Trinkaus in Dusseldorf. "We can count on consumer spending to support growth. Germans aren't euphoric shoppers and won't be, but we have the impression they're sure of their jobs and inclined to spend their money."
The euro was little changed after the report, trading at $1.3190 at 10 am in Frankfurt, up 0.4 percent on the day. It has gained 1.9 percent against the dollar this year.
Tuesday's report was the latest to suggest the economy is weathering a debt crisis that the European Commission said may push the 17-nation eurozone into recession.
German business confidence jumped to the highest in five months in January and the market research company GfK SE predicts consumer sentiment will increase for a fifth straight month in February.
At the same time, waning demand for German goods across the region is weighing on growth. The economy, Europe's largest, will expand 0.3 percent this year after notching a 3 percent increase in 2011, according to the International Monetary Fund (IMF). The IMF forecast a 0.5 percent contraction for the eurozone as a whole.
The German airline Deutsche Lufthansa AG reached a pay agreement on Thursday granting 33,000 workers a 3.5 percent wage increase, which the Verdi labor union called "a good result which puts more money in employees' pockets".
The business-management software maker SAP AG plans an average pay increase this year of 4 percent for its 16,300 workers in Germany, Euro am Sonntag reported on Saturday.
Loewe AG, a German maker of high-end flat-screen televisions, forecast on Jan 26 that revenues and earnings will rise this year following a loss before interest and taxes in 2011.
The labor agency's BA-X index, a measure of employment intentions, rose 2 points to 181 in January, the highest since the gauge was introduced in 2004. The rise in the index reflects a "stable" economic situation and also the fact that it's taking companies longer to fill open positions, the agency said.
The decline in German unemployment may slow as companies struggle to find workers for 1 million open jobs amid a shrinking population, the Labor Minister Ursula von der Leyen said in an interview in Davos, Switzerland, on Jan 25.
"Germany is in the middle of a demographic change," Von der Leyen said at the World Economic Forum annual meeting. "Our main concern is how to find qualified workers."
Germany's adjusted jobless rate was 5.5 percent in November, according to the latest harmonized figures from the Organization for Economic Cooperation and Development. That's compared with 9.8 percent in France, 8.6 percent in Italy and a European Union average of 9.8 percent.