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German jobless rate falls to record level

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German unemployment declined more than economists estimated, pushing the jobless rate to the lowest level since reunification.

[FRANKFURT] German unemployment declined more than economists estimated, pushing the jobless rate to the lowest level since reunification.

The number of people out of work fell by a seasonally adjusted 11,000 to 2.695 million in May, data from the Federal Labor Agency in Nuremberg showed on Tuesday. The median estimate in a Bloomberg survey was for a decline of 5,000. The jobless rate dropped to 6.1 per cent.

The report comes two days before European Central Bank officials convene in Vienna to set monetary policy and assess whether they've done enough to sustain an economic recovery in the 19-nation euro region. The ECB is expected to keep its stimulus plan unchanged after President Mario Draghi announced an expansion of quantitative easing by a third to US$89 billion in March and cut the deposit rate further below zero.

"The labor market continues to develop positively," Frank- Juergen Weise, president of the labor agency, said in a statement, noting that unemployment declined even as a seasonal pickup in hiring comes to an end. "Employment has grown strongly and demand for labor has increased significantly." Unemployment dropped by 8,000 in western Germany and declined by 3,000 in the eastern part of the country, the report showed.

Growth momentum in Europe's largest economy remains strong after gross domestic product expanded at the fastest pace in two years in the first quarter. German business sentiment rose to the highest level in five months in May and consumer prices unexpectedly halted their decline. The Bundesbank predicts the economy will retain its underlying strength, even though expansion will probably slow somewhat this quarter.

BLOOMBERG