German Jobless Rate Drops to 8.2%

The number of jobless in Germany dipped below 3.5 million in October, a 12-year low as companies increasingly hired workers to meet demand for orders from toys to tires.

The Federal Labor Agency said Tuesday that the unadjusted jobless rate fell to 8.2 percent, down from 8.4 percent a month earlier. That meant that 3.43 million Germans were without work in October, 110,000 fewer than in September.

A seasonal autumn upswing, coupled with economic recovery, created more work in Europe's biggest economy.

Compared with October 2006, some 650,000 fewer people were out of work, the agency said.

"The positive development in the unemployment figures is attributed to the pick up in the economy," the Nuremburg-based agency said in a statement.

Looking forward, the agency said it expects unemployment to range between 3.4 million to 3.5 million in 2008.

In adjusted terms, the jobless rate fell to 8.7 percent from 8.8 percent in September. That is its lowest in 14 years, with the adjusted numbers of jobless down 40,000 to 3.6 million.

Germany has been emerging over the past two years from a lengthy period of economic stagnation that pushed up unemployment and prompted Germans to tighten their purse strings, leading to slack consumer demand. Much of the current recovery is powered by exports into a growing world economy.

"The ongoing improvement of underlying labor market conditions will support consumer demand, which has recently suffered from inflation fears due to sharp food and energy price increases, in 2008," said Timo Klein, a senior economist for Germany with Global Insight.

"The confidence in this outlook is underlined by healthy wage increases in key industries of 3 to 4 percent recently, which will be broadly repeated in 2008," he said.

Last week, the GfK research group said that consumer confidence in Germany fell for the third consecutive month, pushed lower by what it called the "surprising emergence" of fears about inflation in Germany, a concern shared with the European Central Bank which would move to adjust interest rates if it rose above 2 percent.

The GfK report came after the Ifo Institute reported that German business confidence slipped for a sixth straight month on concerns about the rising euro and its effects on exports.

UniCredit economist Alexander Koch said that despite those declines "the labor market upswing should not come to a halt."