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German Jobless Rate Falls to New Low in January

Germany's unemployment rate fell to a record low in January, data showed, though subdued retail sales figures suggested concern about the euro zone crisis rather than a healthy jobs market had driven consumer spending in the run-up to Christmas.

Reichstag Parliment building, Berlin, Germany
Maremagnum | Getty Images
Reichstag Parliment building, Berlin, Germany

Falling a tenth of a percentage point to 6.7 percent, the seasonally adjusted jobless rate plumbed its lowest point since figures for a reunified Germany were first published more than two decades ago.

Retail sales data showed an unexpected decrease in December, but economists said the figures were prone to revision and may well have under-reported activity.

Economists said they expect the downward trend in unemployment to ease in light of slowing demand for products from Europe's largest economy.

"Order books are filling up much more slowly and forward-looking indicators are giving a mixed picture," said Joerg Zeuner from VP Bank." "The slowdown in Europe will soon reach Germany's labour market," he added.

"Easing demand from abroad and caution at home will increasingly hit the unemployment figures." Germany's export-driven economy recovered quickly from the 2008/09 financial crisis, but the euro zone's debt troubles continue is casting a heavy shadow over the country's growth outlook for this year.

Many economists expect at least one quarter of economic contraction in Germany as global demand falls and the region's crisis affects its key neighbouring export markets.

The longer-term mood seems unlikely to improve whatever the outcome of debt swap talks with stricken euro zone member Greece, as worries about the solvency of some other periphery states are also raising concerns for investors.

The jobs market data should give further lift to consumers, who remain upbeat in surveys and forecast to weather any bad news thanks to the stability of employment.

Economists suggested the preliminary retail data, which showed an unexpected fall of 1.4 percent in real terms in December, was unreliable.

"Anecdotal reports and consumer confidence simply do not confirm the news from these data," said Berenberg Bank economist Holger Schmieding.

"Typically, at year end, retail sales get under-reported a lot and usually revised up significantly." Retail association HDE remains positive for the year ahead -- in an annual news conference on Tuesday it forecast retail sales to grow a nominal 1.5 and real 0.5 percent in 2012.

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