UPDATE 1-German unemployment falls far more than forecast in April

Wed Apr 30, 2014 4:49am EDT

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By Michelle Martin

BERLIN, April 30 (Reuters) - German unemployment fell for a fifth consecutive month in April, Labour Office data showed on Wednesday, underlining the resilience of the job market in Europe's largest economy and boding well for domestic demand.

The number of people out of work decreased by 25,000 in seasonally adjusted terms to 2.872 million. That compared with a Reuters consensus forecast for a drop of 10,000.

"Germany's jobs boom has intensified again, after a bit of a lull during the euro crisis," said Christian Schulz, senior economist at Berenberg Bank.

"That is noteworthy as the effect of the mild weather, which may have boosted the jobs market in the winter, should have faded in April."

That is welcome news for the German government, which is relying on domestic demand to power growth this year while foreign trade is expected to be weak.

German consumer morale remained at its highest level in more than seven years heading into May as shoppers' income expectations hit a record high, helped by modest inflation and anticipated pay rises, a survey showed on Tuesday.

The jobless rate held steady at 6.7 percent, in line with the consensus forecast in a Reuters poll.

"That will significantly support domestic demand," said Heinrich Bayer, economist at Postbank.

"We probably had a relatively significant increase in private consumption in the first quarter."

But some German companies have still been talking about slashing jobs.

BASF said it would cut about 260 jobs around the world by the end of 2015, Air Berlin has said it cannot rule out further job cuts and a magazine reported a new strategy to be unveiled by Siemens would include thousands of job cuts.

Data on Tuesday showed Spain's workforce shrank at a quickening pace in the first quarter. Spain's jobless rate, in sharp contrast to Germany's, has not dropped below 25 percent since 2012.

Separate data released by the statistics office on Wednesday showed German retail sales falling on both a monthly and yearly basis in March, but economists warned against setting too much store by this data given its volatility.

Shoppers in Germany spent 1.9 percent less on retail than in March last year, missing the consensus forecast for a 1.6 percent rise. (Reporting by Michelle Martin; Editing by John Stonestreet)

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