January 3, 2012 / 9:56 AM / 8 years ago

UPDATE 1-German Dec unemployment falls more than expected

* German jobless rate at 6.8 pct, lowest since unification

* Yet economists warn labour market likely to worsen (Adds details, background, quotes)

BERLIN, Jan 3 (Reuters) - German unemployment fell more than expected in December, with the jobless rate falling to the lowest level since the unification of Germany two decades ago, data showed on Tuesday.

Unemployment fell by 22,000 on the month in December, the Federal Labour Office said, while the adjusted jobless rate fell to 6.8 percent from 6.9 percent in November. The median forecasts in a Reuters poll of economists were for a drop of 10,000 and for the rate to remain steady at 6.9 percent.

“The labour market success story continues - despite the debt crisis,” said Andreas Rees at Unicredit. “Companies are sitting on thick order books, even if new business had eased recently. This is good news for private consumption.”

While unemployment has risen to alarming levels in many European states in the wake of austerity measures and recession, it has consistently fallen in Germany, Europe’s biggest economy, over the past year.

The Labour Office said the number of unemployed was on average 2.976 million in 2011, the lowest level in 20 years, while the jobless rate panned out at 7.1 percent.

Data on Monday showed that the number of people employed in Germany rose 1.3 percent in 2011 on the year, surpassing the 41 million mark for the first time.

Some German firms have announced plans to add staff in 2012.

Premium carmaker Audi said last week it planned to add about 1,200 staff in Germany this year as it invests in the development of new technologies.

State-owned rail operator Deutsche Bahn has vowed to create 10,000 new jobs by next year, of which about 1,000 will be in Germany.


Employment trends lag changes in growth, however, and the outlook for the German economy, which had rebounded strongly from the 2008/09 financial crisis, is darkening.

The deepening euro zone debt crisis and a global slowdown are set to hit exports and consumer and investor confidence. The German economy likely grew some 3 percent in 2011, yet economic momentum is set to slow to around 0.5-1.0 percent this year.

Joerg Zeuner at VP Bank said it was to be expected that “the situation on the labour market will deteriorate somewhat in the coming months, at least temporarily.”

Some German firms are announcing measures to help them cope with economic weakness by cutting costs further this year.

Deutsche Telekom plans to consolidate information technology departments in Germany to save hundreds of millions of euros, which could affect 8,000 employees.

Deutsche Lufthansa, Germany’s biggest airline, is due to publish plans on a new savings programme by the end of March, having already slimmed down by 1 billion euros in annual costs over the past two year. (Reporting by Sarah Marsh, Additional Reporting by Madeline Chambers, Maria Sheahan and Klaus Lauer)

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