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German Unemployment Falls To One-Year Low

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Germany's unemployment eased sharply in January to the lowest level in nearly a year, helped by the improving economic outlook and in part by favorable weather conditions, underpinning hopes that the recovery will gather pace in the first quarter on the back of strong private consumption.

Data released by the Labor Ministry on Thursday showed that the number of persons without a job decreased by around 28,000 from the December level to 2.93 million January, hitting the lowest level in eleven months. January's decline was significantly bigger than the 5,000 fall forecast by economists.

Figures showed that the unemployment rate in Europe's biggest economy stayed unchanged at a seasonally adjusted 6.8 percent at the end of January. Expectations were for a modest increase to 6.9 percent.

Earlier today, figures released by the Federal Statistical Office for the month of December revealed that the seasonally adjusted ILO jobless rate stayed unchanged at 5.1 percent. However, the number of unemployed persons decreased by around 5,000.

Meanwhile, the number of persons in employment increased by 50,000 month-on-month to around 40.53 million in December, the statistical office said. The employment rate edged up to 64.4 percent from 64.3 percent.

The improvement in labor market conditions is consistent with the latest consumer confidence survey compiled by GfK, which indicates that sentiment is set to remain strong in February as consumers stay upbeat about the economy and future income. The forward-looking indicator climbed to the highest level since August 2007.

In recent months, purchasing power of German households has been strengthened by a stable employment situation, with bright prospects for employees' income to grow amid a low inflation.

The German economy is estimated to have grown by 0.25 percent in the fourth quarter, and by 0.4 percent in the whole of 2013. Bundesbank forecasts growth to rise to 1.7 percent in 2014 and to 2 percent in 2015.

Earlier this month, the Federation of German Industry said that the economy is set to expand at least 2 percent this year, helped by the easing pressures in the global economy and the gradual exit of the euro area from a recession.

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