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German Unemployment Unexpectedly Dips, Jobless Rate Holds Steady

German Unemployment Unexpectedly Dips, Jobless Rate Holds Steady
6/27/2013 6:01 AM ET

German unemployment declined in June suggesting that the country's labor market remained sturdy despite harsh job conditions in the rest of Eurozone. The unexpected improvement followed weak May data when extreme weather and public holidays marred job creation.

The number of unemployed persons in the country fell by 12,000 in June from a month earlier to 2.94 million, according to the latest figures released by the Labor Ministry on Thursday. Economists had forecast a gain of 8,000 after a downwardly revised increase of 17,000 in May.

"It seems as if earlier reforms are still paying off and that the German labour market needs less economic growth than in the past to create jobs," said Carsten Brzeski, an economist at ING Bank NV.

The seasonally adjusted jobless rate stayed unchanged at 6.8 percent, close to the lowest level since the country was reunified more than two decades back. The May figure was downwardly revised from 6.9 percent reported initially.

"With yesterday's strong consumer confidence and today's good labour market report, domestic demand should continue to being an important growth driver this year," Brzeski added.

Separately, the Federal Statistical Office reported today that the seasonally adjusted unemployment rate dropped to 5.3 percent in May from 5.4 percent in April. The number of unemployed fell 0.4 percent month-on-month to 2.27 million, according to the statistical agency.

Market research firm GfK said Wednesday that according to its forward-looking gauge for German consumer confidence, sentiment is set to climb to its highest level in almost six years in July amid increased optimism about the general economic prospects as well as continued rise in income expectations.

Bundesbank expects economic activity to pick up strongly in the second quarter. It projects 0.3 percent expansion for this year and 1.5 percent in 2014. A rebound in consumer spending helped the German economy dodge recession in the first quarter, when the economy expanded 0.1 percent.

by RTT Staff Writer

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