UPDATE 2-German jobless drop helps broaden recovery

* Seasonally adjusted jobless falls 17,000 m/m in August

* Fall is 14th in a row, rate way below euro zone average

* Adjusted unemployment lowest since Nov. 2008

(Adds Bruederle, further details)

By Christian Kraemer

NUREMBERG, Germany, Aug 31 (BestGrowthStock) – German unemployment
fell in August to its lowest since November 2008, laying the
ground for consumers to spend more and adding to evidence that
the export-led economy is outstripping its euro zone peers.

The Federal Labour Office said on Tuesday unemployment fell
by a seasonally adjusted 17,000 to 3.193 million. The decline,
while slightly less than the median 20,000 forecast by
economists in a Reuters poll, could encourage Germans to spend
more freely after some euro zone neighbours complained Germany
was importing too little from them. (ECONDE: )

“The development of employment and the higher wages that
come with (more productive labour) give Germany’s economic
recovery substance and its own dynamic,” Economy Minister Rainer
Bruederle said in a statement following the release of the data.

The adjusted unemployment rate remained steady at 7.6
percent, in line with the Reuters poll.


For a graphic showing German unemployment, double-click on


Germany — Europe’s largest economy — grew at its fastest
rate since reunification in the second quarter and more than
twice as fast as the overall euro zone, where some of its
partners face the risk of a double-dip recession.

Exports have driven the rebound but consumer morale, long
seen as Germany’s weak point, is also increasingly upbeat.
Business sentiment rose to its highest in more than three years
in August.

The euro zone jobless rate for July stood at a much higher 10
percent. [ID:nBRLVJE64S]

Greek unemployment posted a record jump in May, the last
month for which data are available, as austerity measures to
rescue the country’s finances lead to job cuts. [ID:nLDE67B0SA]


Germany has faced criticism from euro zone partners —
including France — for not doing enough to stimulate domestic
demand that could in turn boost neighbouring economies.

“The impressive performance of the labour market can only
become a real success story if it eventually leads to a pick-up
in private consumption. All ingredients are in place for this to
happen now,” said Carsten Brzeski of ING Financial Markets.

“It is not only the drop in unemployment which bodes well
for private consumption but also job creation. Since the
beginning of the year, employment growth has been on a positive
trend,” he said.

Carmaker Daimler (DAIGn.DE: ) said last month it would add 400
full-time jobs at its Mercedes-Benz plant in Rastatt, Germany,
from 2011 by making temporary positions permanent.

The metals industry has also been hiring more full-time
workers, though the total number of jobs will likely remain flat
for the rest of the year, an industry official said earlier this

Germany shed fewer jobs than others in the global crisis,
thanks partly to reforms promoting labour force flexibility as
well as state spending to encourage firms to put staff on
“Kurzarbeit” — shorter hours — instead of firing them.


Growth in exports is expected to fade in the second half of
the year as the outlook for some of Germany’s trading partners
is less rosy and the government is pressing ahead with 80
billion euros ($100 billion) of budget cuts over the next four
years. Chancellor Angela Merkel’s government is due to approve
more elements of the austerity plan on Wednesday.

“The American economy is going quite badly right now,”
Heinrich Alt of the Labour Office told a news conference.

“There are a bunch of risks. The development so far is
stable but we cannot ignore that the situation is more fragile
than at other times of the upswing.”

Economists said that may not dampen the job market

“The economy will not be able to sustain these high growth
rates. The tempo will slow in the autumn and next year. But the
slowdown won’t be dramatic enough to have a major impact on the
labour market,” said Eckart Tuchtfeld of Commerzbank.

Federal Statistics Office figures showed the number of
people in work in Germany rose to 40.305 million in July from
40.296 million in June. The headline unadjusted unemployment
total fell by 4,000 on the month to 3.188 million.
(Additional reporting by Maria Sheahan in Frankfurt; Writing by
Annika Breidthardt, editing by Mike Peacock/Ruth Pitchford)

UPDATE 2-German jobless drop helps broaden recovery