German unemployment rate falls to 7.7 pct in 2010

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The German unemployment rate fell to 7.7 percent in 2010 amid strong economic recovery, official figures showed on Tuesday and ministers insisted that even better results were within reach.

The unemployment rate fell from 8.2 percent in 2009, and improvements were seen across the country and in all age brackets, the labour office said.

Germany, which has the biggest economy in Europe, has pulled out of its worst post-war recession and activity expanded last year by what might be the fastest rate since reunification in 1990.

"The trend is good," Labour Minister Ursula Von der Leyen told a press conference in reference to unemployment that has been falling since mid 2009.

Von der Leyen was "very confident" of continued improvement this year.

The number of people out of work nonetheless climbed in December on an unadjusted basis, the benchmark for public debate, by 85,000 to 3.016 million as cold temperatures crimped construction activity, the data showed.

On a seasonally adjusted basis, the standard used by economists for comparisons, it was the first monthly increase since June 2009.

The seasonally-corrected unemployment rate in December remained at 7.5 percent however, in line with an average analyst forecast compiled by Dow Jones Newswires.

That is its lowest rate since 1992.

Economy Minister Rainer Bruderle forecast "further improvement in the labour market this year," and said in a statement that full employment was within reach.

Von der Leyen noted meanwhile that "the potential of people available for work is shrinking," in particular among the young, an issue highlighted by some business federations.

Germany has benefited from increased global trade and domestic demand has also picked up as companies went ahead with investment plans and the number of unemployed fell steadily last year.

The central bank has forecast economic growth of 3.6 percent for 2010, a post-reunification record, followed by further expansion of 2.0 percent this year.

ING senior economist Carsten Brzeski noted that on average, almost 40.4 million people had a job in Germany last year, the highest level ever, and said the rise in unemployment last month would not halt the improving trend.

"The winter weather could delay a further improvement but will not stop it," Brzeski said.

"Recruitment plans are still improving and vacancies are at the highest level since 2007," he added.

"Flexibilisation on the labour market (e.g. variable working hours and opt-out clauses in pay agreements) and wage constraint have enabled this 'miracle'," Commerzbank economist Eckart Tuchtfeld said.

© 2011 AFP

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