April 28, 2016 / 10:52 AM / 3 years ago

In a surprise, German unemployment falls in April

BERLIN (Reuters) - German unemployment unexpectedly fell in April and the jobless rate remained at its lowest level in more than 25 years, boosting expectations that private consumption will continue to drive growth this year.

A man read job offers during the first day of the "Hannover Messe" industrial trade fair in Hanover April 19, 2010. REUTERS/Tobias Schwarz

“Unemployment has fallen further due to the spring recovery,” Frank-Juergen Weise, head of the Federal Labour Office, said on Thursday.

The seasonally adjusted jobless total fell by 16,000 to 2.706 million, the Labour Office said, beating a Reuters consensus forecast for an unchanged reading.

The adjusted unemployment rate held steady at 6.2 percent, its lowest level since Germany’s reunification in 1990.

Separate data from the Federal Statistics Office showed on Thursday that seasonally adjusted employment, as measured by the International Labour Organisation, rose by 44,000 to nearly 43.4 millions in March.

The government expects employment to reach a record 43.5 millions this year and nearly 44 million in 2017. That should further propel domestic demand and push up tax revenue, enabling the government to increase state spending.

“Despite the recent drop in exports to China and other emerging markets, Germany continues to create ever more jobs,” Berenberg economist Holger Schmieding said.

He added that solid employment growth would underpin consumer spending in the coming months, helping to cushion the German economy against external shocks.

In another positive sign for private consumption, the GfK consumer sentiment indicator showed on Wednesday that consumer morale improved unexpectedly heading into May, with shoppers more upbeat about their future income.

The German economy expanded by 1.7 percent in 2015, its strongest rate in four years, mainly driven by robust private consumption and higher state spending on refugees. It is expected to grow by around the same amount this year.

Editing by Jeremy Gaunt

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