BERLIN Feb 19 (Reuters) - German employment is at its highest level since reunification more than 20 years ago, the Statistics Office said on Tuesday, boosting hopes that domestic demand will offset weaker exports in Europe's largest economy.
Some 41.9 million people were employed in Germany in the fourth quarter of 2012 - the highest level in any quarter since East and West Germany reunified in October 1990, according to preliminary estimates from the Statistics Office.
Germany's population has risen in those years, but not substantially.
The employment picture contrasts sharply with the situation in some of Germany's struggling euro zone peers like Greece and Spain, where around one in four people are unemployed.
Staffing levels climbed by 0.8 percent on the year in the fourth quarter even though the economy contracted by 0.6 percent. Around three-quarters of the increase in employment was due to service providers taking on new employees.
But employment growth slowed compared with the first, second and third quarters of 2012, when staffing levels increased by 1.4 percent, 1.2 percent and 1.1 percent respectively.
The rise in employment should nonetheless increase private consumption at home, which is expected to be a key pillar of growth for Europe's economic powerhouse this year as the euro zone crisis weakens demand for German products in neighbouring states.
Market research group GfK said earlier on Tuesday private consumption in Germany would rise by 1 percent after inflation this year.
High levels of employment are also fuelling demands for robust wage hikes, with unions calling for rises of up to 6.6 percent this year.
The latest data from Germany's Federal Labour Office showed seasonally adjusted unemployment fell by 16,000 in January, breaking a long run of increases to take the jobless rate down to 6.8 percent, not far from a post-reunification low.
Unemployment data for February is due to be published on Feb. 28.