BERLIN, March 6 (Reuters) - Job vacancies in Germany hit an all-time high in the last three months of 2017, data showed on Tuesday, underlining the strength of a labour market that is pushing up wages and fuelling a consumer-led upswing in Europe's biggest economy.
Vacancies surged by 85,000 on the quarter and by 128,000 on the year to reach 1.18 million in the fourth quarter, a survey by the IAB labour office research institute found.
"Demand for new staff rose the strongest in manufacturing and construction," IAB researcher Alexander Kubis said.
Manufacturing firms posted 161,000 vacancies, up 35 percent on the year, while construction companies reported 98,000 vacancies, a 24 percent rise, the survey showed.
An index measuring the ratio between unemployment and job vacancies fell to 2.0 which was also the lowest on record.
"The figures show the improved labour market conditions for applicants, but they also mean rising challenges for employers when recruiting staff," Kubis said.
Germany's labour market is going from strength to strength, with the jobless total falling more than expected in February and employment hitting a record high in January, data showed last week.
An unusually strong, sustained economic upswing combined with a long-signalled shortage of people of working age have made German firms more worried about attracting and retaining talent than peers in the United States, France, Italy or Britain, a survey by staffing firm ManpowerGroup found in 2016.
Employers are offering incentives including above-inflation pay increases, flexible working conditions beyond the statutory minimum, subsidised meals and workplace nurseries.
To counter the skills shortage, German companies have also designed training schemes for people from other European states where youth unemployment is high, including Hungary, Romania, Bulgaria and Spain. (Reporting by Michael Nienaber; editing by David Stamp)