German economy starts year in fighting form
Better-than-expected German jobless data on Tuesday showed Europe's biggest economy appears to be holding up to the debt crisis but it may not escape a global downturn altogether, analysts said.
Unemployment data for both December and 2011 as a whole suggested the German labour market is managing to shrug off the debilitating eurozone debt crisis, with unemployment dropping to its lowest level in more than 20 years.
That signals good news for household consumption, one of the most important pillars of the German economy, analysts said.
According to the Federal Labour Agency in Nuremberg, the German jobless total fell by 263,000 to 2.976 million in 2011, with the unemployment rate down 0.6 percentage points to 7.1 percent.
Both figures were the lowest annual figures since German unification in 1990.
Just a day earlier, separate data showed the number of employed people in Germany hit a record 41.04 million in 2011, with more than half a million jobs created last year.
It was the first time the number of people working in Germany had risen above the 41-million mark, Destatis said. The population of the country is nearly 82 million.
Continuing the good news, the German Chamber of Commerce and Industry (DIHK) said on Monday that consumption in Germany was at its strongest level for more than a decade in 2011.
Meanwhile, new car registrations, a key gauge of demand in one of the country's most important industrial sectors, rose in December and over the whole of 2011, official data showed on Tuesday.
"2011 can be described as the most successful since German unification for working people," said German Economy Minister Philipp Roesler.
"Demand for labour remains very high, despite the current economic risks. Overall, the upturn in employment should continue, albeit at a slower rate," Roesler said.
Looking at December alone, the unemployment total actually increased slightly in nominal or raw terms last month.
However, unemployment tends to rise in the winter months as sectors such as construction slow down and lay off workers due to the cold weather.
Adjusted for such seasonal factors, the numbers showed a monthly decrease of 22,000 to 2.888 million and the seasonally-adjusted jobless rate slipped to 6.8 percent in December -- the lowest level since 1991 -- from 6.9 percent in November.
"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.
Heinrich Bayer at Postbank Research predicted a "tangible tailing-off of upward momentum" on the labour market in 2012.
"Weak growth at the turn of the year will have left its mark," he said.
"Nevertheless, the German labour market will remain relatively robust and, in spite of all the crisis talk, 2012 will prove to be another record year for the labour market, both in terms of unemployment and employment."
Timo Klein at IHS Global Insight was somewhat more cautious.
"Milder-than-usual winter conditions probably helped December data additionally so that it should still be expected that the economic slowdown observed since about mid-2011 will be reflected in less benign numbers during 2012," he said.
Nevertheless, "overall, labour market conditions will remain markedly healthier in Germany than in most other countries in Europe in the months ahead," the analyst said.
"Unemployment may still show a lagged reaction in the form of a modest setback ... but the demand for labour is not about to show a sudden drop."
Andreas Rees, chief German economist at UniCredit, also pointed out that the weather in December had been exceptionally mild, boosting activity in the construction sector.
At the same time, "companies are still sitting on a huge pile of backlog orders, thereby keeping the labour market going.
"We expect job creation in the next few months to continue which is good news for consumer expenditures in 2012," the analyst said.
© 2012 AFP