UPDATE 1-German jobless rate hits record low in March

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BERLIN, March 29 (Reuters) - Germany's jobless total dropped more than expected in March and the unemployment rate hit a record low, data showed on Thursday, reflecting the strength of a labor market that has become the linchpin of a consumer-led upswing.

Household spending has turned into the main source of economic growth in Europe's biggest economy, propelled by record-high employment, increased job security, inflation-busting pay hikes, low borrowing costs and a growing population.

Data published by the Federal Labour Office showed the seasonally adjusted jobless total fell by 19,000 to 2.373 million. That was way more than the predicted drop of 15,000 forecast in a Reuters poll.

The unemployment rate dropped to 5.3 percent in March from 5.4 the previous month, the lowest level since German reunification in 1990, the Office said.

"The positive development of the labor market continued in March," Labour Office head Detlef Scheele said. He added that companies created more jobs within the scope of social insurance and firms also continued to look for more staff.

In a further positive sign, seasonally adjusted employment as measured by the International Labour Organisation climbed to a record 44.59 million in February, separate data released by the Federal Statistics Office showed earlier on Thursday.

The rock-solid labor market is likely to further boost consumer confidence and household spending in Germany, where domestic demand has trumped exports as the main growth driver in recent years.

The robust job figures followed an upbeat GfK survey on Wednesday that showed consumer sentiment rose unexpectedly heading into April as shoppers became more upbeat about their income and were more willing to spend.

"Full order books and the strong growth of the global economy make it unlikely that the job boom will come to an end in spring," KfW chief economist Joerg Zeuner said.

But he added that companies were far less optimistic about future business and that employment expectations were dampened due to the threat of a trade dispute with the United States.

"The losers of a spiral of protectionism between the U.S. and the EU would be consumers and employees on both sides of the Atlantic," Zeuner warned.

The German government has forecast 2.4 percent growth for this year which would be the fastest rate since 2011. (Reporting by Michael Nienaber Editing by Madeline Chambers and Gareth Jones)