German labour market defies crisis

Frankfurt - The German labour market is continuing to hold up against the crisis and unemployment dropped sharply over the whole of last year, new data showed on Tuesday.

"The labour market continued to develop positively at the end of 2011 and we can look back on a good year when unemployment dropped sharply, employment increased and demand for labour remained very high throughout the whole year," said the head of the Federal Labour Agency Frank Weise.

In nominal terms, the German jobless total actually rose slightly in December.

The total number of people claiming dole rose by 67 000 to 2.78 million last month, equivalent to a jobless rate - which measures the unemployment total as a proportion of the population as a whole - of 6.6%, up from 6.4% in November.

However, unemployment tends to rise in the winter months as industries such as the construction sector slow down and lay off workers due to the cold weather.

Adjusted for such seasonal factors, the numbers actually showed a drop of 22 000 to 2.888 million, according to separate data calculated by the Bundesbank.

The seasonally-adjusted jobless rate slipped to 6.8% in December from 6.9% in November.

That was much better than expected: analysts had been pencilling in a drop of just 10 000 in the jobless total.

"The German labour market has remained in fairly good shape in spite of the ongoing debt crisis and the cooling in global growth," said Barclays Capital economist Thorsten Polleit.

Looking at the year as a whole, the jobless total fell by 263 000 to 2.976 million in unadjusted terms in 2011. That is equivalent to an annual average unemployment rate of 7.1%, down from 7.7% in 2010, the Federal Labour Agency said.